The past week brought hope and confidence to lots of crypto participants. This is due to the growth seen in most major cryptocurrency tokens as they witness some price increase. However, happy days seem to be cut short suddenly as prices twist in reverse.
The last 24 hours have thrown the crypto market into confusion and tension due to the fall in prices. Some crypto experts fear that rising inflation could lead to another period of bear markets. Most of the major crypto assets are experiencing a downward climb after a significant increase in the past week’s space.
Bitcoin price has dropped beneath the $23,000 level again. It’s currently trading around $23,0760 after it had climbed up to $24,500. Ethereum is not doing any better as its price got to $1,570 from $1,764. However, it has shown a slight price rally to be at $1,688 currently. There are also price losses for Ethereum Classic and Cronos.
Trivariate’s founder and CEO, Adam Parker, explained during an interview with CNBC that the current situation has contributed to the CPI. Parker said the CPI is likely to continue in the higher office.
According to Parker, he’s yet to notice any supportive intent from the Fed. He further observed that the housing market is experiencing a surge in rent by up to 12% annually.
CPI plays an important role in crypto market trends
The Consumer Price Index (CPI) is an important indicator that the Fed uses to measure inflation. But some experts have no faith in the index due to its sluggish nature. For them, simplifying the CPI will take a long time. Typically, the CPI must meet below 2 for a significant price rally for both the crypto and stock markets. However, this can only happen with a massive downturn.
Other experts have different opinions concerning the pending events. For Chris Toomey of Morgan Stanley, inflation is yet to peak. According to him, the global GPD is creating more concern. Hence, the current inflation is becoming structural instead of transitory.
The effect of increased inflation can be quite harsh on the prices of cryptocurrencies. The Federal Reserve is trying to control its influence by raising interest rates and using quantitative tightening. In June, the cryptocurrency was thrown into a bloodbath as the Fed raised rates by 75 bps.
As the July CPI displayed rising inflation, the crypto market showed no significant drop. Some experts explained that the market had previously partaken of bad CPI data followed by an increase in interest rates.
Many players expect a positive turn in the CPI price in August, with the Fed reversing course. Any adverse situation could push the cryptocurrency market into a bearish trend.