The US Consumer Price Index (CPI) data, which investors have been eagerly waiting for, has finally arrived. According to the data, the US CPI in June rose to 9.1%. The rise in the CPI, which came above the expectations, caused a liquidation movement in the wide crypto money market, especially Bitcoin, in the first reaction.
US CPI data so hot, crypto market heats up
It seems that price pressures will force the Fed to take big strides in raising rates later this month. The Fed’s 75 basis point increase is now considered certain. However, with the latest data, 100 basis points is also on the table. CME’s FedWatch tool shows the possibility of a 100 basis point rate hike at the Fed’s July 27 meeting.
As you follow on Kriptokoin.com, the US Bureau of Labor Statistics announced a CPI of 9.1% for the month of June. This is the highest inflation in the US in the last 40 years. As an initial response, crypto prices dropped drastically after that. Bitcoin (BTC) and Ethereum (ETH) prices hit $18,990 and $1019, respectively.
Is the bitcoin and altcoin market at risk of crashing again?
On the other hand, the fear of recession is also increasing as the rising inflation is for the fourth month in a row. The current scenario confirms the Fed’s 75 basis point rate hike on 27 July. But the main concern is the increased possibility of a 100 basis point rate hike. CME’s FedWatch tool shows a 45% probability of 75 bps and a 55% probability of 100 bps.
Bitcoin and altcoins are already under pressure due to bearish conditions and a liquidity crisis. Therefore, it is possible for the crypto market to decline significantly as a result of rising interest rates. Indeed, interest rate hikes by central banks around the world in recent months have dampened investor interest in crypto and stocks. Cryptocurrencies have been following stocks closely for the past few quarters. As investors reduce their exposure to macroeconomic risk, they sell crypto along with stocks.
A survey released Wednesday by Goldman Sachs revealed that 93% of small business owners think the US will go into recession within the next six months. Bank of America economists say a pullback from individual and institutional investors is likely due to a ‘slight recession this year’.
Purges increase amid rate hike and recession fears
Meanwhile, the global crypto market cap has slumped to $867.54 billion after the latest CPI report. According to experts, the rise in crypto prices is fake due to short selling by traders and institutional investors. Because institutional investors were taking short positions in BTC before the inflation data. The total crypto liquidation has reached over $250 million. Also, Ethereum and Bitcoin have witnessed 88 million and 87 million liquidations in the last 24 hours.
Bitcoin (BTC) shorts and longs / Source: CoinglassAccording to the MLIV Pulse survey, 60% of Wall Street experts surveyed think that BTC could drop to $10,000 due to rising inflation.
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