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The growth in the US Inflation rate is also notably weighing down on the hoard of digital currencies beginning with Bitcoin.
The latest inflation data released by the Bureau of Labor Statistics today show that inflation in the United States (US) grew by 9.1% in June, a figure that confirmed investors’ jittery approach to the market this week. The 9.1% inflationary surge is even far above the 8.8% predicted by the Dow Jones.
With May’s inflation growth of 8.6% judged to be the highest ever recorded since December 1981, the outpacing record of this month is evident that the Federal Reserve’s monetary tightening policies are producing next to little positive response.
The release of the inflation data is already having its toll on the US stock market with the futures tied to the Dow Jones Industrial Average (INDEXDJX: .DJI) falling 300 points, or 0.98%. S&P 500 (INDEXSP: .INX) futures fell 1.46% and Nasdaq 100 (INDEXNASDAQ: NDX) futures lost 2.13%.
Corporate America is also projected to respond to the higher than normal inflation figures in today’s trading session. There are quite a number of courses that are bound to precede this data release on the path of the Federal Reserve. Through its Federal Open Market Committee (FOMC), billed to meet later this month, the apex bank can increase interest rates yet again in a bid to curtail the imbalance between demand and supply.
Raising interest rates impact the ability of businesses to borrow, a measure that can force them to adequately utilize the resources that are available to them. While this measure will prevent passing off excessive production costs to the consumer, its potency will be unavoidably harmed by the persistent supply chain strain fueled by traces of COVID-19 breaks and the ongoing war between Russia and Ukraine.
Per the data released, CPI, excluding volatile food and energy prices, increased 5.9%, compared to the 5.7% estimate.
US Inflation Growth and the Crypto Response
The growth in the US Inflation rate is also notably weighing down on the hoard of digital currencies beginning with Bitcoin (BTC).
Following the release of the Bureau of Statistics, the price of Bitcoin has slumped by 3.70% to $19,134.03, according to data from CoinMarketCap. Ethereum (ETH) has shed off 4.18% to $1,026.84 as the rest of the altcoins are speedily experiencing the ripple effect of investor’s reactions in the broader, global market.
While inflation is generally expected to be a favoring factor for digital currencies, the understanding of how the Fed’s policies will affect the stock market has forced investors to shun risky assets in a bid to avoid any likely doomsday ahead.
There are expectations that the continuous rate hike can plunge the economy into a recession, and while it is unlikely the Fed’s watch events unfold in this way, it will aid the eventual growth of crypto assets since the Federal Reserve will be forced to inject funds in a bid to revive the economy.
In the meantime, institutional capital and utility account for what is keeping the digital currency ecosystem together amidst this economic turmoil.