Yesterday’s stock and cryptocurrency values fell due to worse than anticipated news. According to the most recent consumer pricing index (CPI) data, inflation grew 8.3% annually and by 0.1% for the month. Economic experts had anticipated a little decline. It signals to consumers that high costs will persist. For investors, it means sustained price pressure for higher risk assets.
The Federal Reserve is more likely to hike interest rates by 0.75% later this month as a result of the subpar results. Rate increases make consumers pull their money out of riskier investments like cryptocurrency, and many economists worry that the Fed’s aggressive actions could bring on a devastating recession.
This week, the market leader in cryptocurrencies, Bitcoin (BTC), has been steadily rising. Before the inflation news, BTC had risen beyond $22,600 after falling below $19,000 a week earlier. Then, yesterday, it decreased to almost $20,000, according to data from CoinMarketCap. Many cryptocurrency analysts anticipate greater declines.
With the impending transition from proof-of-work mining to proof-of-stake, Ethereum (ETH) will significantly reduce the amount of energy it consumes. On the strength of optimism surrounding the merger, Ethereum briefly crossed the $2,000 mark in mid-August, wiping off some of this year’s losses. It wasn’t enough, though, as Ethereum’s price fell by about 10% yesterday after the CPI announcement, indicating that it couldn’t withstand economic pressure.
The overall value of the cryptocurrency industry, which had just reclaimed the $1 trillion threshold, has dropped to $957 billion. We should anticipate that crypto prices will continue to suffer as new economic difficulties appear in the distance.
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