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U.S. inflation rose 8.6% in May, the fastest increase since 1981. Markets reacted negatively, including crypto.
- Bitcoin fell sharply after the latest U.S. inflation report.
- Inflation a general increase in prices and fall in the purchasing value of money. rose 8.6% in May, on an annual basis.
- The next rate hike by the Fed is expected this month.
In a move not anticipated by economists, economic inflation in the United States accelerated again in May, according to a new report.
The U.S. Department of Labor reported on Friday that the consumer price index (CPI), the most widely used indicator to track inflation, rose 8.6% in May from a year earlier. The figure represents a rebound of 1% on a monthly basis and a return to unseen levels. since 1981 according to the data of the Bureau of Labor Statistics .
Meanwhile, the core CPI, which excludes food and energy costs, rose by 6% year-on-year in May, down from 6.2% in April, but above expectations of 5.9%, as noted in the report. CoinDesk . Rising prices for housing, gasoline and food contributed to the increase, the report said. It should be noted that the CPI measures a wide range of basic goods and services.
Inflation data beat analysts’ estimates The report also showed that the inflation rate in the U.S. has declined and has undermined hopes that the peak level of inflation has already been exceeded. According to CNBC Dow Jones analysts had anticipated a level of 8.3% for May. Other economists had expected a reduction to 8.2% from 8.3% in April, adds CoinDesk .
Bitcoin responds to the decline
The markets reacted negatively to the report, and cryptocurrencies were no exception. The stock futures a futures contract is a standardized legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future. pointed to a sharply lower open en Wall Street according to CNBC as the major cryptocurrency fell sharply following the news.
Amid the market turmoil, Bitcoin the biggest and most popular cryptocurrency in the world. It is a decentralized digital currency that enables users to make trustless peer-to-peer transactions. retreated from its crucial level of USD $30,000. Following data from Coinmarketcap The flagship cryptocurrency cryptocurrencies are digital currencies that use cryptographic technologies to secure their operation. dropped from around USD 30,100 to below USD $29,400 on Friday morning, coinciding with the inflation report. Bitcoin has risen slightly and is still close refers to the closing price; similar to the same term used in stock trading. to the USD $29,500 by the time of editing.
The broader cryptocurrency market also saw a 2.6% pullback this Friday in its global capitalization. Ethereum a decentralized open-source blockchain with smart contracts functionality. the second-largest cryptocurrency, has slid just over 3% this day, while others like Cardano y Solana recorded slightly higher losses of 7.5% and 5% respectively.
Inflation, rate hikes and crypto
This year, Bitcoin has retreated more than 50% from its all-time price high above USD $67,000, recorded in November 2021. Overall, the broader digital digital technologies are these electronic tools that have the ability to generate, store or even process data. asset market has been dominated by a bearish trend that appears to be driven by a number of macroeconomic factors, including inflation in major Western nations and the continuing armed conflict between Ukraine and Russia.
Although in November the high CPI data boosted the Bitcoin on new price heights, this 2022 inflation reports have not been favorable; possibly because they are accompanied by expectations of rate hikes.
The US Federal Reserve (Fed) has been tightening its monetary policies to address a place where cryptocurrency can be sent to and from, in the form of a string of letters and numbers. inflation. In early May, the FED decreed a second increase of half a percentage point for interest rates, and a next increase is expected in a few days . However, with the higher CPI data, the scenario arises that the central bank will apply an even higher rate hike of 75 basis points per meeting, instead of the expected 50 basis points, as analysts are predicting.
This scenario has reduced investors’ appetite for high-risk assets such as Bitcoin . However, several observers seem to agree that the market will begin to normalize once inflation begins to dissipate and the Fed slows down rate hikes. Howard Greenberg, a cryptocurrency educator at Prosper Trading Academy said this idea in a conversation with CoinDesk but also warned that a spike in inflation could extend and compound the current crypto-winter.
If we start to see a reduction in the CPI number as expected, I think we will see that reflect well within all markets, signaling that the tide is starting to flow in the right direction and we should see a little more risk on investment return to the markets with both Bitcoin and the total market an area or arena, online or offline, in which commercial dealings are conducted. seeing some increases in volumes and price action.
- U.S. Federal Reserve raises interest rates 0.25% and Bitcoin jumps above USD $41,000
- Bitcoin struggles to stay above USD $30,000 as U.S. inflation hits 8.3%
- U.S. inflation hits record high of 7.9% y/y, but Bitcoin is undeterred
Article by Hannah Estefania Perez / DiarioBitcoin
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