Bitcoin and Ethereum rallies lost their momentum. Bitcoin and ETH prices have dropped over 6 percent in just the last hour. The latest crypto rally was a result of the latest US Consumer Price Index (CPI). An annual 8z CPI increase of 5 percent revealed the “cooling off” inflation. However, the crypto market is seeing new lows as Fed officials take a hawkish stance. Here are the details of price movements and the reasons behind them
FED influence on the crypto market
Fed officials are taking a hawkish stance on next month’s rate hike. st. Luis’ Chairman James Bullard gave every indication of a 75 basis point hike. It has made clear its intention to exert significant downward pressure on inflation. Neel Kashkari, chairman of the Minneapolis Fed, is one of the most “dove” Fed officials. However, even he expressed urgency to control “very, very high inflation.”
CPI is a strong indicator of inflation in the economy. Higher inflation is often followed by quantitative tightening from the Fed as a measure to control inflation. Three-quarters of a percentage point increase in June turned into a bloodbath in the crypto market. Bitcoin has exhibited its worst quarter in over a decade. However, the high inflation data in the following month did not affect the market negatively.
The main reason for this was the expectation that inflation had started to cool. Also, the United States GDP grew negatively for two consecutive quarters. This technique meets the criteria for a recession. Many experts expected the Fed to reverse its hawkish stance given the macroeconomic conditions. However, a larger-than-usual hike in September may turn into a bloodbath, as it did in June.
Another possible impact: Mt. gox
Alongside macroeconomic developments such as Fed decisions, there is one more development that could have an impact in the cryptocurrency space: Mt. gox. As we have also reported as Kriptokoin.com, Mt. Gox was an exchange that was hacked in 2014 and could not return the funds it held to its users until this year. However, as a result of legal efforts, the refund process began. By the end of this month, almost 130,000 BTC is expected to enter the market. It is thought that this situation may have a small effect on the decrease in prices.
Latest situation in bitcoin and altcoin prices
When we look at the top 20 cryptocurrencies by market capitalization, it is striking that they are all traded on the red board. Bitcoin dropped 7% at $21,812, while Ethereum dropped 6.1 percent at $1,735. BNB fell 7.8 percent, while XRP lost 8.3 percent. Cardano (ADA) fell 12.4%, while Dogecoin (DOGE) fell 13.5% to $0.070023. Thus, it recorded the biggest drop in the top 20. SOL lost 11.3 percent, DOT 11.6 percent, SHIB 13.2 percent and AVAX 14.1 percent. While MATIC decreased by 12.4 percent and OCD by 10 percent; surprisingly, TRON (TRX) dropped just 4.9.
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