The cryptocurrency market got undeterred after the revelation of the latest US inflation report.
The US Department of Labor revealed a new report highlighting that inflation continued its decay path in February amid geopolitical confrontations between Russia and Ukraine.
According to the government agency’s Bureau of Labor Statistics, the consumer price index, the most widely used indicator to detect inflation rates, increased 7.9% in the last year. Inflation accelerated to its fastest pace since January 1982. Monthly, the CPI rose 0.8% in February, faster than the 0.6% rise reported in January.
The Bureau explained that the gasoline, food, and housing indices increased. Energy alone increased by 25.6% over the past year, with gas and natural gas reaching 38% and 23.8%, respectively; the CPI also detects a wide range of essential goods and services.
The rise to a new four-decade high signifies that the disparity between supply and demand for consumer staples endures. The inflation rate began to reach high peaks since the COVID-19 pandemic and the money injection policies applied by the US Federal Reserve. Now, a war in Europe between two of the most prominent exporters of oil, gas, grain, and fertilizers worldwide would make things worse for the US economic structure.
The Unraveling Cryptocurrency Market
Interestingly, the cryptocurrency market got unperturbed by the news. Bitcoin and the most relevant digital currencies remained serene, even after the almost simultaneous publication of the inflation rates affecting the European Central Bank (ECB), which shared a projection of annual inflation of 5.1% for the European Union this Thursday.
The ECB also shared its latest monetary policy forecasts and economic growth projections. The ECB explained that forecasts downward growth for the next three years, at 3.7%, 2.8%, and 1.6%. It has also decided not to raise key interest rates due to the conflict unleashed in Ukraine but intends to set up a monthly reduction over asset purchases.
The digital asset market was flat following the reports. Bitcoin (BTC) remained in bearish territory and traded at least $39,000. The second-largest cryptocurrency Ethereum (ETH), extended price losses to settle around US$2,600.
The motionless price reaction departed from previous market reactions to inflation news. Recently, Bitcoin and the major altcoins have been volatile after the IPC reports in the US. In fact, after the October report (in November), Bitcoin and Ether shot up to reach new all-time highs. While moves have been less bullish since then, cryptocurrencies have so far been reacting to inflation reports.
The digital currency market has maintained extremely volatile rates in recent weeks amid the uncertain geopolitical scenario imposed by the current conflict over Europe. In the middle of this week, Bitcoin rallied above $42,000 amid expectations that the Joe Biden administration would launch an executive order linked to digital currencies.
By: Jenson Nuñez
