The recent acceleration in the United States consumer price index for February comes at just the right time and with expectations to match. The index stands at 7.91%. It was expected that peak during Q1 and remain high this year.
While it may not have a major impact on prices, the Federal Reserve and other central banks are trying to tighten monetary policy so that people will believe they can keep prices stable.
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The price of bitcoin had fallen since December, when 10-year yields rose, and credit became more expensive.
Market Inflation Reviews
People in the credit market understand that inflation has become indispensable. This means that rising interest rates will continue. As credit instruments sell, this causes interest rates to rise. This makes it harder for people to pay for things.
Dylan LeClair, senior analyst and co-founder of 21stParadigm, said†
Fixed income securities are not responding well to (accelerated) inflation at the four-decade high, who would have thought?
Higher rates in a historically crowded economy; the market does the Fed’s rate hike cycle for them.
Things probably break faster than most think.
In addition, we have increasing financial conditions and deleveraging (in legacy markets because bitcoin derivatives are already taking risks).
Bitcoin value is stable around $39,000 | Source: BTC/USD chart of Tradingview.com
On this point, LeClair tweeted†
Fixed income has been murdered in the past three months. Accelerate inflation and slow growth across the board. A gradual and sudden process of diminishing liquidity as the process of deleveraging continues. BTFD conditions in all markets have changed to “sell the rip”.
The end of this regime is likely to be marked by the liquidity crisis in legacy markets, which is likely to have a net negative effect on bitcoin price, followed by a turn towards quantitative easing and, ultimately, yield curve control by central banks.
Related literature | Hedge Fund Holdings Failing to Boost Bitcoin Price
Whatever happens to the global economy, blockchain has continued to prove its worth. The case for a non-sovereign scarce digital monetary asset has never been stronger, and investors should embrace this new trend before it’s too late.
Insight into crypto market
Over the past 24 hours, cryptocurrency prices have been relatively quiet.
Yesterday’s plunge in US markets came in response to new inflation data that showed prices rose 7.9% year-on-year over the past three months and fueled fears of future tightening from monetary policymakers in Europe, Asia and the Americas – with all eyes on when they will strain their own wallets.
The top ten cryptocurrencies were all relatively stable, with only a few showing 1% or less moves. Among them was Avalanche, who won 2%. Finally, Polkadot adds 5%, making it the first time in a long time that we’ve seen such high growth. Bitcoin added 1.08% to its value.
Featured image from Pixabay, chart from Tradingview.com