Crypto market is again in a bearish phase and prices have fallen in the past 24 hours. Experts are giving split opinion and while some contend that the inflation has peaked while others say the worst is still to happen.
At one time Bitcoin values have surged to$24.5K but it has again fallen below $23 K and when reports las came it the number one cryptocurrency was trading at $22.8K. The number two crypto coin prospects are no different and it tanked steeply from $1,764 earlier in the week to as low as $1,570. It has since rallied a bit and is trading at $1,622. Ethereum Classic and Cronos values have also tanked miserably.
Inflation Fears Dominate Markets
Adam Parker, the CEO and founder of Trivariate in a candid interview with CNBC said that he believes the CPI numbers will remain high. The CPI is the benchmark which defines the level of inflation and is often used by the Fed to formulate remedial measures to cool down the market. However, there are experts who believe that the CPI is a lagging indicator that will not ease up for a long time.
Parker added that there is no indication that the Fed will formulate a dovish policy. Parker also revealed that the rent in the housing market is increasing by 12% annually. A crypto and a stock market rally can be expected only when the CPI is below 2. However, a CPI below 2 will not happen unless there is massive inflation.
Numerous experts including Chris Toomey of Morgan Stanley felt that inflation has not peaked and the state of global GDP is also worrying. Chris faults the way inflation is viewed and added that it is being viewed structurally, rather than transitory.
Inflation And Crypto Sector
Inflation and Crypto sector are closely related and the effects are debilitating. When the Fed had increased the rate by 75 bps the crypto sector crashed and there was a bloodbath. With inflation showing no signs of wanning, we can expect quantitative tightening and interest rate hikes by the Federal Reserve. This is bad news for the crypto sector.
July CPI numbers indicates surging double-digit inflation. However, the crypto market did not have a big fall and experts contend that, the market had already priced in another bad CPI data and subsequent interest rate hike. Another bad CPI figures and remarkably large hike from the Fed can cause the crypto industry to return to a bear market.