Coin Live Prices – Crypto Price Tracker & Latest Coin News
Image default
Bitcoin Climbs

Bitcoin Climbs Upward Following CPI Update

December’s consumer price index (CPI) dropped by 0.1%, the two-year lowest mark since the pandemic hit. The data, on the other hand, shows a 6.5% annual growth of price, reflecting the ongoing cost-living pressure in the U.S.

CPI Cooled Off As Anticipated

The U.S. Department of Labor announced on Thursday the CPI in December was 0.1% lower compared to the figure of the previous month. As inflation data came lower as expected, the hypothesis of Bitcoin breaking the $17,500 mark became foreseeable.

Bitcoin’s price surged to $19,000 shortly after CPI revealed, marking the highest point since Nov. 9, according to data from CoinMarketCap. While increase has been the trend on average over the last 12 months, the latest data suggests that the Fed’s efforts somewhat paid off.

As the flagship cryptocurrency soared, other coins also saw price increaes. Ethereum (ETH) broke the $1,400 level on the same day while other altcoins were reportedly in green at the time of writing.

The news brought fresh hope on interest rate decline. The Fed kicked off the tightening campaign last year.

Targeting a 2% inflation rate, the governmental body continued to raise interest rates to curb inflation, pushing the global economy to the brink of recession.

Financial markets, under the influence of the bleak economic outlook, have turned ugly.

Stock market fell sharply while cryptocurrency entered an extended downturn season. With CPI’s modest improvement, investors anticipate an interest slowdown at the coming FOMC meeting scheduled for Feb. 1.

Should We Expect A Bull Run?

The crypto market has yet been under a trust crisis. Cathie Wood, CEO and founder of ARK Invest highlighted that fears of contagion effect have misled the equity market.

In her latest letter about The Market Overlooked in 2022, Wood called the challenging scenario a “wall of worry” that veiled certain breakthrough innovations.

Bitcoin is potentially projected to minor rally as pressure on risk assets is likely reduced.

But to trigger the bull to run, the reality may bias against the expectation, particularly given that the chairman Jerome Powell has repeatedly warned investors of continuous rate hikes until the Fed reaches its inflation target.

With recent layoffs in tech, the macro conditions are unlikely to improve anytime soon. Several prominent corporations have begun to lay off employees in order to save costs, including Silvergate Bank, Coinbase, and, among other major entities.

The crypto market has begun the new year with cuts and bruises from the previous year’s high volatility. Although the total market cap topped up $871 billion, the figure still reflects a decline in value over the same period last year.

According to Vetle Lunde, senior analyst at market research firm Arcane Research, Bitcoin remains far from its former all-time high this year, with 2023 expected to be a year of recovery.

According to Arcane Research, while the beginning of the year is typically weaker in terms of trading volume, the crypto market’s lethargy has worsened since most of the retail investors were out.

A bleak economic picture prompts people to reconsider investing in riskier assets such as cryptocurrencies. Economic uncertainty can cause investors to seek out less risky assets, which have a negative correlation with Bitcoin.

Two major aspects to look for is regulatory oversight and adoption after a series of incidents that wiped out a trillion of dollars last year. 2023 is expected to be a year of strengthening laws as global lawmakers strive for accelerated transparency and level of protection.

These efforts will in turn drive more institutional adoption. Even if the FTX crashed, the cryptocurrency sector still gets a lot of support and trust from venture capital firms, financial institutions, showing the potential for recovery and growth returns.

Read More

Related posts

The Path To A Bitcoin Standard In Africa

Bitcoin ETF: A Decade Of Struggle For Legitimacy

Bitcoin Drops Below $45K, Crypto Market Cap Slumps $120B (Weekend Watch)

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.