The United States economy is reeling under a bout of inflation, reaching its highest level in the last 40 years. The US Bureau of Labor Statistics released the Consumer Price Index for June 2022. The Consumer Price Index has surged to 9.1%, and there are fears that the US economy will once again come under a bout of double-digit inflation. The war in Ukraine has led to a surge in food and energy prices around the globe, and it is indicated for the current round of surging inflation.
Within minutes of the CPI release, Bitcoin (BTC) is down by about 4%, while Ethereum (ETH) is down by about 5%. Conventional economic indicators like NASDAQ, Dow Jones, and S&P 500 have also tanked miserably after the release of the latest figures of the Consumer Price Index.
Last month’s Consumer Price Index figures also showed that inflation increased by 8.6% on a year-to-year basis, the largest increase since 1981.
The firefighting measures were immediately started, and Fed responded to sky-high inflation with Quantitative Tightening monetary policies. The major Central Banks increased the interest rates by 0.75 points, the largest rise since 1994. The hawkish measures initiated by the Fed hurt the crypto sector and led to the onset of a chronic crypto winter which continues to this day.
Consumer Price Index -What The Crypto Experts Foresee
Experts contend that next month, the CPI is expected to be low since the latest decrease in commodity prices will reflect in the August data.
John, the co-founder of The Rock Trading, has an interesting theory that predicts different scenarios depending on specific variables. If the CPI figures are below 8.6%, the market could expect a rally. Anything above will result in tanking in crypto prices. According to John, CPI above 9.0 would return to the bear market.
Michaël van de Poppe, the founder of Eight Global, revealed that the CPI would be a make or break for Bitcoin. In a tweet, he said that it all depends on CPI, and a significant challenge will be for BTC to hold at the support level of $19.5K and resistance at $19.8K.