Bitcoin had a jump in trading volume this Tuesday morning (14) with the release of US inflation data. At the time of writing, the largest cryptocurrency in the market is down 1% from before the event.
According to the US government, inflation reached 0.5% in January, a total of 6.4% over the past 12 months, putting the Fed a long way from meeting its target of 2% a year. So this is bad for Bitcoin as it gives room for the Fed to keep raising interest rates, slowing down the US economy as it tries to control prices.
The main villains remain energy services and energy itself. However, food still has an inflation rate of 10.1%, a figure above the average increase for all goods and services.
Bitcoin’s response to inflation data
Immediately, Bitcoin saw a huge increase in its trading volume on exchanges. The price also showed changes, but not as big.
After falling 1.5% on the news, Bitcoin recovered before even reaching $1,500. Yet it has since bounced back and is trading 1% lower than its pre-US inflation price.
In comparison, while the US pointed out that price increases were 0.1% in December, inflation was 0.5% in January.
That is, Jerome Powell could come back with 0.5% increases in US interest rates to try and meet the Fed’s annual inflation target. As a result, stocks, cryptocurrencies and other investments are likely to remain under pressure.
US stock markets opened the day lower
Like Bitcoin, Gold also falls after the news, but by only 0.4%. US equities follow the same path.
SP500, the index that aggregates the 500 largest companies in the US, opened this Tuesday with a 0.8% decline, Dow Jones also started the day with a 0.7% loss of its value, showing that the market is recovering concerned about the Fed’s next moves.
Finally, unlike other markets, Bitcoin is also under pressure from regulatory issues, mainly from the US. Some attribute this pressure to an operation to kill cryptocurrencies, as highlighted by the founder of Kraken, a broker fined BRL 158 million by the SEC last week.
“Operation Chokepoint 2.0 is in full swing. It is no coincidence that every financial regulator in the country has been attacking commonplace and reputable domestic cryptocurrency companies in the past week.”said Jesse Powell, founder of Kraken, this Monday (13) about regulation. “There is no interest in overseeing cryptocurrencies. All that is done is knocking them down.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
