Bitcoin Value Falls Sharply After US Inflation Numbers Hit 41 Year High

The price of Bitcoin tumbled on Wednesday evening after news that US inflation hit 9.1 percent in June, its highest rate in 41 years. Bitcoin dropped to a 24-hour low of $19,078 (roughly Rs. 15.2 lakh) at 6:56 pm IST following the higher-than-expected consumer price index (CPI) report that dropped at 6 pm IST, earlier than what was expected. With inflation all but guaranteeing further rate hikes from the US Federal Reserve, the mood among risk assets, as well as crypto, swiftly turned sour although price has recovered a fair bit since.

“Over the last 12 months, the all items index increased 9.1 percent before seasonal adjustment,” the Bureau of Labor Statistics report notes. “The increase was broad-based, with the indexes for gasoline, shelter, and food being the largest contributors.” The inflation increase in June was yet another record-setting spike as it rose at the fastest pace since November 1981.

After the CPI report was published, US president Joe Biden's administration addressed the subject. The White House also claimed that the data is already out of date and the CPI report does not reflect “the full impact of nearly 30 days of decreases in gas prices.” In fact, the White House says that “core inflation” has dropped for the third month in a row.

The increased inflation statistics are seen by crypto specialists to have the potential to once again throw the cryptocurrency markets into a spiral owing to worries of the Reserve changing monetary policy.

On the other hand, if the Consumer Price Index statistics shock everyone by showing signs of a slowdown in the US economy, the cryptocurrency markets may see an upward trend. Stock, bond, and cryptocurrency markets all went into freefall once May's high inflation data was announced.

Following the release of the CPI statistics, the US Federal Reserve decided to hike interest rates at its June policy meeting from the 50 basis points indicated at the previous meeting, to 75 basis points at that time.

Already battered by the downturn over the past few months, the cryptocurrency market has struggled to regain footing in recent weeks. Following the collapse of the Terra stablecoin in May, contagion spread amongst major cryptocurrency funds and lenders, setting off a domino effect across the crypto industry as a whole.

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