The crypto market experienced its most extensive green after a long period of bearish market trend. The event follows a positive CPI (Consumer Price Index) report from the US Bureau of Labor Statistics in July. This announcement became a major move on Bitcoin and Ethereum prices.
The consumer price index fell by a lower-than-expected 8.5% in July, according to earlier reports. However, this does not appear to contribute positively to potential inflation. In this regard, experts are now expressing concern about what they consider to be sticky inflation.
Managing Director of Enduring Investments LLC, Michael Ashton, revealed what he believed to be the reason for the CPI decline.
According to Ashton, the significant factors contributing to the decline in CPI were flexible items. He stated that some examples of such flexible items are clothing and airline tickets.
However, this will not affect some unstable areas of the economy, he added. For example, the prices of certain sticky parts of the economy, such as rent, will continue to rise regardless of a reduced CPI.
He further stated that there will be a continuous acceleration of the sticky inflation index. Moreover, there is no promise that the rise in inflation in the US economy will stop anytime soon, he added.
The impact of inflation on crypto assets
There is currently strong growth in the digital currency industry. This is the effect of the positive CPI (Consumer Price Index) report.
In addition, many altcoins, including Bitcoin and Ethereum, reached new highs after a long period of falling prices. Bitcoin is currently trading below $24,000.
Meanwhile, Ethereum is trending below $1,900. This is a result of solid market sentiment in the industry.
Overview of US Bureau of Labor Statistics data
The Consumer Price Index is an effective indicator that provides accurate information about the state of inflation in the US economy. The United States department responsible for CPI reports is the US Bureau of Labor Statistics. Normally, this department submits CPI reports every month.
Meanwhile, the department that controls high inflation in the country is the Federal Reserve. This group achieves its goals through increasing interest rates and quantitative tightening.
Reports in June cited a fall in cryptocurrencies and an extremely aggressive Fed due to excessively inflated CPI. This also put BTC in one of its worst states at the time. Moreover, the stock markets were not left out during this period either, as many shares fell at different prices.
Therefore, it is not advisable to invest in digital currencies at the moment, Ashton warns crypto investors. This is due to the uncertainty of inflation protection.
In this sense, he advised investors to opt for tangible assets. He gave examples of real estate: real estate, agriculture, precious metals and energy.
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