Crypto Market Trading Sideways As Inflation Fears Kick In, What Does The Future Hold?

The past week brought hope and confidence to many crypto participants. This is due to the growth seen in most major cryptocurrency tokens as they witness a price surge. However, the happy days seem to be cut short when prices turn into reverse.

The last 24 hours have thrown the crypto market into a state of turmoil and tension as prices fall. Some crypto experts fear that rising inflation could lead to another period of bear markets. Most of the leading crypto assets are seeing a downward escalation after rising sharply in space last week.

Bitcoin price has dipped back below the $23,000 level. It is currently trading around $23.0760 after rising to $24,500. Ethereum is not doing any better as its price rose to $1,570 from $1,764. However, it has shown a slight price rally to currently stand at $1,688. There are also price losses for Ethereum Classic and Cronos.

Trivariate founder and CEO Adam Parker, during an interview with CNBC, noted that the CPI contributes to the current situation. Parker stated that the IPC is likely to maintain its high position.

According to Parker, he has not yet noticed any intention of support from the Federal Reserve. He further noted that the housing market is experiencing an increase in rent of up to 12% per year.

The CPI plays a vital role in the trend of the crypto market

The consumer price index (CPI) is a vital indicator that the Fed uses to measure inflation. But some experts don’t trust the index due to its lagging nature. For them, it would take quite a while for the IPC to relax. Typically, the IPC needs to be below 2 for the price to rise significantly for both cryptocurrencies and stock markets. However, this could only happen with a massive recession.

Other experts have different opinions about the pending events. For Chris Toomey of Morgan Stanley, inflation has not yet reached its peak. According to him, the global GPD is creating more concern. Therefore, the current inflation is becoming structural instead of transitory.

The impact of rising inflation could be quite drastic on cryptocurrency prices. The Federal Reserve has been trying to control its influence using interest rate increases and quantitative adjustments. In June, cryptocurrencies were engulfed in a bloodbath when the Federal Reserve inflicted a 75bp rate hike.

Crypto Market Trading Sideways As Inflation Fears Kick In, What Does The Future Hold?
Total Cryptocurrency Market Rises 2% on Chart | Source: Crypto Total Market Cap at TradingView.com

As the July CPI showed rising inflation, the crypto market did not show a significant drop. Some experts explained that the market had previously participated in bad CPI data followed by an increase in interest rates.

Several players anticipate the positive turn of the value of the CPI in August with a change of direction from the Federal Reserve. Any contrary condition would likely push the crypto market into a downtrend.

Featured image from FX Empire, Chart from TradingView.com

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