US Inflation Jumps Most in 40 Years, Bitcoin, Ethereum Gain
In December, monthly inflation in the US was a bit higher than expected, reaching 0.5%, while the annual inflation increased to 7% and was the same as expected.
Economists expected that the consumer price index (CPI), a key measure of consumer prices released by the US Labor Department, will show that inflation jumped by 0.4% in December and 7% year-over-year – the highest increase in prices since 1982.
Bitcoin (BTC) moved up after the numbers were released, jumping from USD 43,400 to USD 43,900 in several minutes, and increasing its daily gains to around 5%. Ethereum (ETH) also moved up, surpassing USD 3,375 and increasing daily gains to 8%.
The annual inflation rate in the US:
While economists disagree on when inflation will peak, it’s well past the initial time frame the Federal Reserve (Fed) had expected to see.
“You’ve got the Fed in panic instead of patient mode, so the risk is overshooting... We’re now in a position of the Fed chasing instead of anticipating. It’s worrisome,” Diane Swonk, Chief Economist at Grant Thornton, told CNBC.
According to Marcus Sotiriou, an analyst at the UKUK-based based digital asset broker GlobalBlock, there may be a selloff in the crypto market if the inflation numbers are larger than expected. This, however, shouldn’t be a long event, “as I suspect the market has already priced in the worst-case scenario due to the persistent selling recently,” he wrote in an emailed note before the CPI numbers were released.
Sotiriou argued that the on-chain data is “generally bullish,” and that it suggests that these prices could be a buying opportunity, adding:
“Bitcoin has entered the buy zone for dormancy flow, which has only flashed 5 times in Bitcoin’s history, which all lead to incredible rallies.
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