After long periods of bearish trends, crypto markets have seen their most significant greens. Following the U.S. Bureau of Labor Statistics’ positive CPI report (Consumer Price Index in July), the event was a major push on the crypto market. The announcement was a major factor in the rise of Bitcoin and Ethereum prices.
Past reports have shown that the CPI dropped below the 8.5% expected by July. However, this doesn’t seem to contribute positively to potential inflation. This is why experts now express concern over what they call sticky inflation.
Michael Ashton is the Managing Principal for Enduring Investments LLC and he has explained the reasons behind the reduction in CPI.
Ashton said that flexible items were the major contributors to the reduction in CPI. Ashton stated that apparel and airfare are two examples of flexible items.
However, this won’t affect certain areas of the economy that remain sticky, he said. Regardless of the CPI being reduced, rent prices, for example, will continue to rise.
The sticky inflation index would continue to rise, he stated. He added that it is unlikely that inflation will slow down in the U.S. soon.
Crypto Assets and Inflation
Digital currency is seeing a significant rally right now. The positive CPI (Consumer Price Index), report is a factor in this strong rally.
After a lengthy period of negative price movements, many altcoins including Bitcoin and Ethereum have reached new heights. Bitcoin trades for less than $24,000 at the moment.
Ethereum continues to trend below $1,900. Solid market sentiment is the reason for this trend.
Overview Of U.S. Bureau Of Labor Statistics Data
The Consumer Price Index provides precise information on the U.S.’s inflation status. U.S. Bureau of Labor Statistics is responsible for the CPI reporting. This agency usually publishes monthly CPI reports.
The Federal Reserve is currently the agency that manages high inflation. The Federal Reserve is the group that achieves these goals through quantitative tightening and interest rate increases.
In June, reports cited a fall in cryptocurrency and an aggressive Fed due the over-increased CPI. BTC was also affected by this. The stock market was not spared during this period. Many stocks plummeted at different price points.
Ashton warns crypto investors that it’s not wise to invest in digital currency at this time. Because of insecurity associated with inflation hedges, this is why it’s not advisable to invest in digital currencies at the moment.
He advised that investors choose tangible assets to achieve this end. He gave several examples of tangible assets, including real estate and agriculture.
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