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Crypto Market Turns Green As CPI Inflation Data Weaker Than Expectations

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Crypto Market Turns Green As CPI Inflation Data Weaker Than Expectations

The cryptocurrency market is on the rise after the release of the US Consumer Price Index (CPI) in July.

In contrary to previous forecasts, US CPI inflation was 8.5%. Although the figure is lower than the expectation of 8.7%, it is important to note that it is still close to the 40-year high of 9.1% set in June 2022.

The question of energy

The reason for this sharp drop is closely linked to the correction in energy prices; the price of oil fell in July. 8.5% was also the CPI reported in March.

The US Bureau of Labor Statistics updates the Consumer Price Index (CPI) monthly. The CPI is used to measure the rate of inflation or spending above a fixed price. The CPI can indicate the level of inflation experienced by consumers based on their daily expenses.

Many people will think that the inflation rate increases if the CPI increases. The CPI is used by traders to guess what prices will be in the future, by employers to calculate wages and possibly by the government to determine the increase in social welfare funds.

Green is the color of the day as the price pump sweeps through the market. Bitcoin edged up 2.5% in the past 24 hours, while Ethereum, Polkadot, and Uniswap jumped over 7%.

NEAR’s performance is the most remarkable among the Top 20 Cryptocurrencies, the price of which increases by 10%. All data was recorded at the time of publication.

It may be an ephemeral force

Data from CoinMarketCap also reported the growth in total crypto market capitalization within an hour of the release with the addition of over $50 billion.

Despite early signs of relief, however, crypto experts issued early warnings about the uncertainty in the CPI data and suggested investors to remain cautious. The July figure is indeed still far from the Fed’s long-term target rate.

It may be too early to celebrate, according to Kathy Jones, revenue strategist at Charles Schwab.

In a comment shared with the media ahead of the report’s release, Marcus Sotiriou, an analyst working for digital asset broker GlobalBlock, said:

“CPI should be 8.7% – if the published number is below this figure, I expect a rally for crypto and stocks to ensue. I think any figure below 9 .1% is promising, as this was last month’s CPI figure, and it would signal the start of a plateau with inflation.In this case, the Federal Reserve [Fed] would be inclined to become less aggressive in its next [Federal Open Market Committee] meeting in September, which the market would be enthusiastic about.

Ethereum pops up before the merger

According to statistics from CoinMarketCap, Ethereum and Tornado caseh are the most trending cryptocurrencies following recent events.

The best explanation is that Ethereum is about a month away from the long-awaited merger. The clarity of the timing plan for the impending merger provides the market with confidence in the future of the second largest cryptocurrency.

Ethereum is also gaining popularity.

The Ethereum mainnet will merge with the Ethereum 2.0 beacon chain, completing the shift from proof-of-work consensus to proof-of-stake consensus. The POS consensus method is expected to improve Ethereum’s security, energy efficiency, and environmental friendliness.

The Goerli and Prater testnet merger is also expected to take place this week, which will be the last scheduled testnet before the mainnet merger takes place in less than six weeks. The market’s most anticipated event is set to arrive on September 19.

The US government has banned Tornado Cash and banned Americans from any possible interaction.

Financial privacy, the feature that makes Tornado Cash unique, is allegedly exploited for money laundering purposes in connection with dangerous hacker groups.

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