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Inflation tracked by the U.S. Consumer Price Index (CPI) rose 9.1% in June, accelerating from May's 8.6% pace to a fresh 40-year high, exceeding economist expectations. Bitcoin's price fell 4.2% to about $19,200 in the minutes after the report was released. The Federal Reserve may now have to keep tightening monetary conditions aggressively to tamp down inflation. Cryptocurrencies across the board had been trading higher last Wednesday in the hours leading up to the CPI release, with bitcoin (BTC) trading at $19,786 in the early hours. The cryptocurrency, which is supposed to serve as an inflation hedge for some traders, is down nearly 70% since inflation started accelerating in October 2021. The June price data might end up representing a peak in the inflation rate, given that oil and gasoline prices have declined. "There are certainly positive signs that would indicate the worst is behind us," said Jonathan Silver, founder, and CEO of Affinity Solutions, a global insights firm tracking consumer purchasing habits.
"The job market remains strong, which is putting money in people's pockets; however, price increases are still outpacing people's paychecks. Hopefully, this trend will reverse itself as inflation reaches its peak and begins to dissipate. Our purchase spending data suggests that this is the direction we are headed," he said.
Bitcoin price after the recent sell-off has yet again feared to lose a notable amount of value as the US CPI rates are about to be released.
During the early trading hours, the BTC price traded sideways as fake rates were been circulated within the space. However, with the new rates assumed to be higher than the previous one, the BTC price is predicted to drop to $13,000 in the coming days. The BTC price is holding the lower support for more than 5 years and the fresh price slash has compelled the price to test these levels. Currently, the asset is hovering within a symmetrical triangle in a 4-hr chart and on the verge of breakdown down these levels. Therefore, the analyst believes a drop from here may form new BTC lows at around $13,000 very soon.
Analysts and pundits will scramble to find some angle to explain intra-day price action whenever important economic numbers are published and this practice is commonplace in the crypto sector. When the United States Bureau of Labor Statistics reported a 7.5% increase in the Consumer Price Index (CPI) on Feb. 10, traders rushed to find some connection to the crypto price action. However, historical correlation data shows investors should actually closely scrutinize whether there is even a relation between Bitcoin (BTC) and major economic indicators. General investment advice would suggest that traders ignore the intraday movements, especially considering that most assets do not trade on a 24-hours basis.
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