Jakarta, CNBC Indonesia – The US Labor Department’s Consumer Price Index (CPI) has risen. The index is watched closely by crypto traders because some investors consider crypto assets to be a hedge against inflation.
The CPI for all items rose 6.8% in the 12 months to November, the highest since May 1982. The increase in the cost of living was in line with the median forecast of economists in a Reuters survey, but the figure rose sharply from October’s 6.2%.
Bitcoin was up 2% within minutes of the CPI data being released, trading around $50,000. But within hours, the price had dropped below the $48,000 level.
Crypto traders may view the high inflation rate as a signal for the Federal Reserve to speed up its withdrawal of monetary stimulus.
At a meeting last month, the US central bank announced plans to start reducing bond purchases worth $15 billion a month from an initial $120 billion a month.
Next week, the Fed is expected to double its tapering pace to reduce all bond buying in March, faster than expected by mid-2022. Less monetary stimulus may be bad for bitcoin, as the price of the crypto asset has in recent years been driven by the assumption that trillions of dollars printing money by the Fed will fuel inflation.
“We expect more trade sideways as views shift to the central bank meeting next week,” said Lennard Neo, analyst at Stack Funds.
At 14.30 WIB, launched coinmarketcap.com, the six crypto coins with the largest capitalization were recorded to experience price declines in the last 24 hours.
Binance and Solana were down nearly 5%, while Cardano and Ethereum were around 3%. As for Tether and Bitcoin, it is red in the less than 1% zone.
Following the release of last month’s October CPI data, bitcoin surged nearly $3,000 and quickly hit a new all-time high of $68,950. Within hours, however, the movement reversed completely, and prices fell as more traders turned to focus on the logical consequence of faster inflation: tightening monetary policy by the Federal Reserve that might reduce demand for risk assets from stocks to cryptocurrencies.
The world’s largest crypto asset by market cap is currently trading at around $47,900, down 31% from its all-time high hit in early November, when the last inflation report was released. Meanwhile, the price is still up 64% so far this year.
(fsd/fsd)
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