According to a report issued by the US Department of Labor, American inflation increased 7% year on year in the Consumer Price Index (CPI), and this favors the cryptocurrency market.
The CPI is the most used method for tracking inflation. December inflation was the highest since June 1982 and rose 0.2% from 6.8% in November. With the disclosure of report demonstrating the high rate of inflation, Bitcoin has skyrocketed, rising considerably, at the time of writing the primary currency was trading at nearly $44,000, taking many altcoins along with it.
After a period of decline followed by a sideways trend, there is a strong upward movement for cryptocurrencies especially, for Bitcoin, but even with the sudden appreciation, the primary cryptocurrency accumulates a drop of about 36% since its high of all time on November 10 of last year.
Fed announces interest rate hike
The appreciation of Bitcoin and cryptocurrencies may turn out to be short-term, as the Fed pressures interest rates to rise to try to fight inflation, as in this way, the cryptocurrency market becomes less attractive and with that who has the advantage is the titles.
Federal Reserve Chairman Jerome Powell, recently reappointed by President Biden, showed up before the US Senate Banking Committee on Tuesday, confirming that inflation is still well above target, meaning the economy no longer needs or wants the highly accommodative policies that we do. The Federal Reserve had already stated that, given the persistence of inflation at these levels, the market should expect three rate hikes this year.
