The past week has brought hope and confidence to many cryptocurrency players. This is due to the growth in the prices of most of the major cryptocurrency tokens as they have witnessed some price increases. However, the happy days seemed to be suddenly shortened as the price reversed.
The past 24 hours have thrown crypto markets into chaos and tension as prices have fallen. Some cryptocurrency experts worry that rising inflation could lead to another bear market period. Most of the leading crypto assets are experiencing a downside climb after surging sharply last week.
Bitcoin price fell below $23,000 again. It is currently trading around $23,0760 after climbing to $24,500. Ethereum didn’t fare much better, with its price rising from $1,764 to $1,570. However, its price has risen slightly and is currently at $1,688. Ethereum Classic and Cronos also had price losses.
Trivariate founder and CEO Adam Parker in an interview NBC Finance Channel, pointing out that CPI is the cause of the current situation. Parker said the CPI is likely to remain high.
According to Parker, he has not noticed any supportive intentions from the Fed. He further observed that the housing market is experiencing a surge in rents of up to 12% per annum.
CPI plays a vital role in crypto market trends
The Consumer Price Index (CPI) is an important indicator used by the Federal Reserve to measure inflation. But some experts have no confidence in the index due to its lag. For them, it will take quite a while for the CPI to moderate. Typically, the CPI must be below 2 for the crypto market and stock market prices to rise significantly. However, this only happens in a massive recession.
Other experts have different views on the pending incident. For Morgan Stanley’s Chris Toomey, inflation has yet to peak. According to him, global GPD is attracting more attention. As a result, current inflation is becoming structural rather than temporary.
The impact of rising inflation can have a considerable impact on the price of cryptocurrencies. The Fed has been trying to control its influence by raising interest rates and quantitative tightening. In June, cryptocurrencies went into a bloodbath as the Federal Reserve raised interest rates by 75 basis points.
The crypto market did not decline significantly as the July CPI showed a rise in inflation. Some experts explained that the market had previously caused interest rates to rise due to poor CPI data.
Some participants expect a positive turnaround in CPI readings in August and a reversal by the Fed. Anything to the contrary could push the cryptocurrency market into a bearish trend.
Featured image from FX Empire, Chart from TradingView.com