US Inflation Increases More Than Anticipatedly in June; Bitcoin & Ethereum Change Direction

US Inflation Increases More Than Anticipatedly in June; Bitcoin & Ethereum Change Direction

With the US inflation rate rising more than expected in June, many consumers are wondering what this will mean for the prices of goods and services. While the overall cost of living is still relatively low, the increase in inflation could lead to higher prices for items such as food, gas, and clothing. 

For those who are looking to invest in Bitcoin or Ethereum, the recent fluctuations in these digital currencies may also be cause for concern. 

So, what does this all mean for consumers? Let’s take a closer look.

The June Inflation

Inflation in the US rose from 8.6 % in May to 9.1 %  in June, which was higher than analysts had predicted. It rose to its highest point in more than 40 years. Prices increased by 1.3% in a month, which was higher than anticipated. The so-called annual Core-CPI, which does not include the cost of food and energy, was 5.9 %.

Bitcoin (BTC) fell immediately following the announcement, falling from above USD 19,900 to below USD 19,100, while Ethereum (ETH) moved from USD 1,090 to USD 1,020. Both of the biggest crypto assets, though, quickly recovered. At 17:59 UTC, BTC was still hovering around USD 19,900 and had not changed from the previous day, while ETH had risen above USD 1,090 and had nearly doubled daily gains.

Bloomberg predicted that the headline inflation rate for June would be 8.8% yearly, but the so-called Core-CPI (consumer price index), which excludes the cost of food and energy, was predicted to fall to 5.7% from 6% one month earlier.

US Inflation Increases More Than Anticipatedly in June.
US Inflation Increases More Than Anticipatedly in June.

Whitehouse Concerns

After White House spokesman Karine Jean-Pierre said she anticipates inflation to be “highly elevated” during a press conference on Monday, the number was predicted to be high.

Fuel costs in the US have decreased to an average of USD 4.63 a gallon, down from above USD 5 a gallon a month ago. At the same time, the White House seized the chance to dismiss the significance of the data, claiming it is “backward-looking” and “already out of date.”

A figure for headline inflation below 8.5%might result in a scenario where the US dollar “drops worldwide” and “crypto goes up 5% +,” according to Chris Weston, head of research at the FX and cryptocurrency broker Pepperstone, in a note cited by Bloomberg.

A large CPI number should “solidify expectations” for a 75-basis point interest rate hike by the US Federal Reserve (Fed) on July 27, according to Weston last Friday, who made the remark. He claimed that such a boost, followed by a 50-basis point hike in September, is “firmly” priced into the market already.

How This Affects Crypto

As for the crypto-native side, popular trader and economist Alex Krüger stated earlier this week that each “big decrease [in asset prices] is bought” and that inflation “comes in even higher” than the anticipated 8.8%.

He claimed that the inflation figures are “too hot” today after they were released.

The Fed’s desire to reduce inflation is the reason for the continued interest rate increases in the US, which many feel to be a major factor in the present bad market for cryptocurrencies.
Interest rate increases could “definitely” result in a recession, according to Fed Chair Jerome Powell. Powell stated during a congressional hearing that bringing inflation down is still “extremely critical.”