The leading cryptocurrency fell below $30,000 following the latest inflation report in the United States.
Inflation in the United States continues to see gains as the cryptocurrency market tries to recover from a steep drop this week.
The US Department of Labor public This Wednesday a new report reveals that inflation rates in the country remain high. The consumer price index (CPI), the most widely used indicator to track inflation, increased 8.3% in April from a year earlieraccording to the Bureau of Labor Statistics of said government agency.
Although the figure was slightly lower than the data for March, when inflation reached 8.5%, the highest in four decades, it remained above economists’ estimates. Among them, analysts Dow-Jones had estimated an increase of 8.1%, according to CNBC. Inflation continues to hover near the highest level since 1982.
Increases in housing, food, airline tickets and new vehicle indices contributed the most to the increase, the Bureau said. Although, on the positive side, the gasoline index fell 6.1% in the month, offsetting increases in the natural gas and electricity indices. It should be noted that the CPI measures a wide range of basic goods and services.
The metrics are an indicator of the imbalance between supply and demand for consumer staples. The inflation rate had started to increase since the COVID-19 pandemic and the money injection policies implemented by the US Federal Reserve (FED). More recently, the prospect of conflict between Russia and Ukraine, two of the world’s largest exporters of oil, gas, grain and fertilizer, has made matters worse for the US economy.
Bitcoin reacted negatively, but is now recovering
The cryptocurrency market reacted negatively to the report. Bitcoin fell almost 5%, below USD $30,000 shortly after the news broke. The rest of the main digital currencies also registered losses, and in general the market shows red numbers this Wednesday. Cryptocurrencies were already trailing losses after an earlier correction this week.
This is the second time in the last few days that Bitcoin (BTC) is tumbling below the $30,000 level, which represents a decline of more than 50% from its all-time high of $69,000 reached in November of last year. The flagship digital asset seems recovering slightly at press time, trading around $31,500.
The Fed has been responding to accelerating inflation with two interest rate hikes so far in 2022. US central bank officials have also anticipated further efforts on the promise that inflation will come down to their target. Of 2%. However, the latest data suggests that the Fed’s latest moves are doing little to curb domestic inflation.
On Wednesday of last week, the announcement of the second half percentage point increase in inflation rates sent cryptocurrency prices skyrocketing. That day, Bitcoin momentarily touched USD $40,000 after the statements of the president of the FED, Jerome Powell. Major digital assets also gained favor before resuming the general downtrend.
In general, the digital currency market has been highly volatile in 2022 amid high inflation, the Fed’s measures to curb inflation and the complex macroeconomic outlook in the face of the Russian war in Ukraine.
Article by Hannah Estefanía Pérez / DailyBitcoin
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