Experts anticipate the start of another decline as U.S. inflation grows in light of the price action's stagnation.
BTC is now worth $23,000, down from its prior price of $24,5000. Bitcoin is currently trading at $22,900 as a result. Ethereum, on the other hand, has decreased from $1,764 at the start of the week to $1,570 today. However, as of the writing, it had somewhat increased to $1,624.
Increased Fears about Inflation on crypto
As long as the cost of goods and services is increasing, the US inflation rate does not appear to be declining.
The CEO of Trivariate, Adam Parker, stated in an interview with CNBC that the consumer price index (CPI) will remain high. The Federal Reserve relies heavily on the CPI as a tool to measure inflation.
Experts predict that the CPI indicator will remain high for a considerable amount of time, however, due to the rising cost of living. Parker continued by saying that the Fed lacked the sincerity necessary to have an impact.
The popular fund manager Morgan Stanley's Chris Toomey claims that the U.S. inflation rate has not yet peaked. Toomey pointed out that another reason why U.S. inflation will persist is the current global GDP. Inflation is now systemic rather than passing, as stakeholders had once thought.
Effect of Inflation on Cryptocurrency Prices
Even if the cryptocurrency market is unique, the ongoing rise in inflation will affect how well digital currencies function. The Federal Reserve uses rate increases and quantitative market manipulation to manage inflation, which hampers the price movement of cryptoassets.
The recent hike in interest rates by the Fed of 75 basis points last month is what caused the correction in the cryptocurrency market.
Experts predict that another rate hike will plunge the cryptocurrency market into another carnage, possibly even worse.
As there are signs of additional interest rate increases, the Federal Reserve has not yet completed its actions to contain inflation. In spite of the Fed's ongoing efforts to combat it, inflation looks to be resolute and has eluded several of its strategies.
Investors in cryptocurrencies are in for another rollercoaster if the regulator decides to raise interest rates, despite the Fed making no announcements.
According to price data, the price of the leading digital currency, Bitcoin, fell by at least 10% following every of the Fed's interest rate meetings. However, the statistics might not predict future market responses in the event of a raise in the future.
Even said, experts advise investors to be prepared for potential volatility because the sentiment is not entirely favorable. Due to the Fed-instigated price increases during the last two months, the value of crypto assets has fallen.
Overall, rate increases won't help the crypto business because digital assets have had trouble gaining traction this year. And the steadily rising interest rates are driving away investment.
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