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US inflation is at record highs, but crypto doesn’t care

US inflation is at record highs, but crypto doesn't care

Key points to remember

  • Today, the annual inflation rate in the United States hit a 40-year high of 7.9%, according to CPI data.
  • Across the Atlantic, the ECB published its latest monetary policy decisions, revising inflation expectations upwards and GDP growth downwards.
  • Despite the two very negative news items being released around the same time today, crypto markets remained largely unfazed.

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The crypto market remained unfazed after the release of the latest Consumer Price Index data that put the US annual inflation rate at a 40-year high of 7.9%.

Crypto Market Stalls on Record US Inflation

The crypto market was unresponsive to news of record US inflation.

According to the latest data published by the US Bureau of Labor Statistics today, indexed consumer prices rose 0.8% from February, bringing the current annual inflation rate in the US to 7.9 %, the highest since January 1982. Increases in the indexes for gasoline, food, and housing were the main contributors to the increase, the Bureau said. Energy alone has jumped 25.6% over the past year, with gasoline and natural gas up 38% and 23.8% respectively.

Global inflation rates had started to soar even before the Russian-Ukrainian crisis. Two years of intermittent shutdowns and unprecedented money printing in response to the COVID pandemic have contributed to inflation. Now, a war in Europe between two of the world’s largest exporters of oil, gas, grain and fertilizer threatens to only make matters worse for consumers. Supply-side shocks triggered by the Russian invasion of Ukraine have already pushed global commodity prices to record highs in March.

On the other side of the pond, things are no better. Today the European Central Bank released its latest Monetary Policy decisions in which it revised its inflation and economic growth forecasts. The ECB now forecasts annual inflation in the EU at 5.1%, down from 3.2% three months ago. On the other hand, GDP growth was amended downward, with projections now calling for economic growth for the next three years at 3.7%, 2.8% and 1.6%. Due to the war in Ukraine, the ECB decided not to chain key interest rates but to start scaling back its asset purchase program until monthly net purchases fell from 40 billion euros in April to 20 billion euros in June.

With news of both the record US inflation rate and the gloomy economic outlook from the ECB around the same time today, the crypto market oddly did not react at all. The two biggest cryptocurrencies in the industry, Bitcoin and Ethereum, are down 6.6% and 5.2% for the day, trading mostly online with the broader crypto market, which is in down 5.1% for the same period. The relatively flat price action can perhaps be explained by the fact that US CPI figures and new monetary policy measures from the ECB fell broadly in line with market expectations.

Interestingly, Bitcoin and Ethereum rallied on similar inflation news in November 2021, with each hitting new all-time highs shortly thereafter.

Disclosure: At the time of writing this article, the author of this feature owned ETH and several other cryptocurrencies.

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