Inflation in the United States has risen 7% in 12 months, its fastest pace in the last four decades. Cryptocurrencies soared modestly following the announcement.
Major cryptocurrencies saw a price rally this Wednesday after the release of the most recent data on inflation in the United States.
Bitcoin it rose to as high as $44,000 and other major assets followed in a modest uptrend. The price recovery coincided with the announcement by the US Department of Labor that inflation had reached its highest point since 1982.
According to the government agency, the Consumer Price Index (CPI), which measures the cost of a wide basket of goods and services, rose to a annual rate of 7% and rose 0.5% from November. The figure represents the highest increase in the last four decades. The Bureau of Labor Statistics (BLS), a division of the federal agency, released the figures.
US sees its highest inflation in 40 years
According to a report from CoinDesk, the latest inflation data exceeded economists’ predictions; even if CNBC points out that the experts consulted by dow jones they hit their forecast since they had anticipated that the indicator would rise to 7%.
“December’s CPI report of a 7% rise over the past 12 months will be shocking to some investors as we haven’t seen a figure that high” in nearly 40 years, said Brian Price, director of investment management at Commonwealth Financial Network to that medium.
For her part, the engineer and investor, Lyn Alden, a specialist in macroeconomics, took to Twitter to share her analysis of these data. Alden, who also got his inflation forecast right, anticipated that the IPC possibly reaches maximums during the first months of 2022. Although I project that in general these figures will remain high “For a long time“.
The expert also shared a graph of inflation from the Federal Reserve (FED) of the last 10 years that is quite revealing. Since the pandemic, marked with a gray line, the level of inflation had plummeted before starting a vertiginous rise.
December CPI comes out tomorrow and has a decent shot at reaching 7%+ year-over-year.
But then unless monthly inflation accelerates from here, the year-over-year figure will likely peak within Q1 2022. pic.twitter.com/7hjA3ehAXI
— Lyn Alden (@LynAldenContact) January 11, 2022
The price of Bitcoin skyrocketed after the figures were released. The major cryptocurrency, which had been hovering around $40,000 for the past few days, hit a high of $43,900 following the news. ethereum it also saw a surge following the announcements, reaching very close to $3,400.
The two largest digital currencies register a 3% and 5.3% increase in the last 24 hours, respectively. Meanwhile, the announcement also seemed to favor other major cryptocurrencies in the market, which also saw similar price increases. US stock prices also benefited from the announcement, according to CNBC.
Bitcoin Moves Calmly on Fed Expectations
It is not the first time in recent months that the inflation report in the US has caused a momentary increase in the prices of the digital asset market. In November, Bitcoin soared more than $3,000 after the release of October’s CPI figures. At the time, the flagship cryptocurrency posted an all-time price record close to $70,000.
Last month, the release of the report also coincided with a slight rise for major cryptocurrencies. as reported DailyBitcoin, at that time it was said that inflation had risen 6.8% in 12 months. Although it did not experience as sharp a rise as with the previous report, Bitcoin He benefited from the report and touched USD $50,000.
The crypto market has seen a massive correction from the November highs. The leading cryptocurrency is back more than 35% from its price high. Earlier this week, Bitcoin it even registered a price below USD $40,000. The rest of the main assets have seen similar effects. Ether, which peaked near $5,000 in November, has been trading around $3,000.
In general, digital currency market watchers are on the lookout for the Fed’s actions. The US central bank is expected to raise interest rates this year to tackle high inflation, a move that could make fixed-income assets like bonds more attractive and dampen investor appetite. for risky assets such as Bitcoin.
FED President Jerome Powell has already announced that the bank will take more aggressive action to reduce cash injection measures. On Tuesday, in a hearing before the Senate Banking Committee, he said inflation remains well above the Fed’s target. That “tells us that the economy no longer needs or wants the highly accommodative policies that we have had”.
Article by Hannah Estefanía Pérez / DailyBitcoin