The cryptocurrency market is going up following the release of the US July Consumer Price Index (CPI).
In contrast to the previous forecast, the US CPI inflation came in at 8.5%. While the figure is down below the expectation of 8.7%, it’s important to note that it’s still close to the 40-year record high of 9.1% established in June 2022.
The Energy Question
The reason behind this sharp decline ties in closely to the price correction of energy; oil price was down during July. 8.5% was also the reported CPI in March.
The U.S. Bureau of Labor Statistics updates the consumer price index (CPI) every month. The CPI is used to measure the rate of inflation or spending above a fixed price. CPI can tell how much inflation consumers are experiencing based on how much they spend every day.
Many people will think that the rate of inflation is going up if the CPI goes up. CPI is used by traders to guess what prices will be in the future, by employers to figure out wages, and possibly by the government to figure out how much social protection funds will go up.
Green is the color of the day as the price pump spreads over the market. Bitcoin was slightly up 2.5% in the past 24 hours while Ethereum, Polkadot, and Uniswap surged to over 7%.
NEAR’s performance is the most outstanding among the top 20 cryptocurrencies, with its price increasing by 10%. All data were recorded at the time of publication.
It May be Fleeting Strength
Data from CoinMarketCap also reported the growth of the total crypto market cap in an hour after the release with the addition of over $50 billion.
Despite early signs of relief, crypto experts, however, made early warnings about the uncertainty with the CPI data and suggested investors remain cautious. The July figure is indeed still far from Fed’s long-term target rate.
It is perhaps too early to celebrate, according to Kathy Jones, an Income Strategist at Charles Schwab.
In a comment that was shared with media prior to the release of the report, Marcus Sotiriou, an analyst working for the digital asset broker GlobalBlock, stated that:
“CPI is expected to be 8.7% – if the released number is lower than this figure, I expect a rally for crypto and equities to ensue. I think any figure below 9.1% is promising though, 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 excited about.”
Ethereum Surges Ahead of Merge
According to CoinMarketCap statistics, Ethereum and Tornado Cash are the top trending cryptocurrencies following recent occurrences.
The best explanation is that Ethereum is about one month away from the much-anticipated Merge. The clarity in the scheduling plan of the impending Merge offers the market confidence in the second largest cryptocurrency’s future.
Ethereum is also gaining more popularity.
The Ethereum Mainnet will merge with the Ethereum 2.0 Beacon Chain, completing the move from Proof-of-Work 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 merge is also slated to take place this week, which will be the last scheduled testnet before the mainnet merge takes place in less than six weeks. The most highly anticipated event in the market is set to arrive on September 19.
The US government has banned Tornado Cash and prohibited Americans from any possible interactions.
Financial privacy, the feature that makes Tornado Cash unique, is alleged to be exploited for money laundering in connection with dangerous hacker groups.