the effects on cryptocurrency markets

Bitcoin (BTC) and Ethereum (ETH) prices rose slightly before falling today as inflation for the month of March accelerated to 8.5% from the same month last year, beating slightly analysts’ expectations.

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“The index continued to rise 8.5% for the 12-month period ending in March, the largest 12-month increase since the period ending December 1981. The index for all items minus food and energy is increased by 6.5%, the largest 12-month change since the period ending August 1982, “wrote the US Bureau of Labor Statistics in its latest inflation report.

Although headline inflation is slightly higher than expected, the core CPI (consumer price index) is slightly lower. Analysts had expected main inflation last month to be 8.4%, while core CPI was expected at 6.6%.

Headline inflation includes all consumer prices, while core CPI excludes food and energy prices.

Main inflation rate in the United States over the past decade:

The price of BTC initially reacted by rising around 0.7% in the first 10 minutes after release, while ETH spiked around 1.5%. However, the market experienced a sudden bearish reversal, with BTC plunging once again to test the key $ 40,000 level.

At the same time, the S&P 500 stock market index was up 0.85% for the day.

Prior to the release of the inflation data, the cryptocurrency markets were posting losses after the strong sell-off on Monday. Likewise, futures on the S&P 500 stock index in the US also rose slightly after a red day yesterday.

According to Marco Sotirioanalyst at Global blocka UK-based digital asset broker, the recent weakness in the cryptocurrency market is mainly due to the current macroeconomic headwinds.

“With inflation rampant, retail investors don’t have enough money to invest large sums in what they see as ‘risky’ assets like cryptocurrencies,” he said in an e-mailed note.

Today’s inflation report comes after energy prices, in particular, rose sharply following Russia’s attack on Ukraine, which began on February 24.

The figure was also released after the spokesman for the White House, Jen Psakibelonging declared yesterday the administration expected headline inflation for March to be “extraordinarily high”.

Ms Psaki added that they expected to see “a big difference between core inflation and core inflation”, and that this was due to disruptions in global energy and food markets due to the war in Ukraine.

Speaking before the release of today’s inflation figure, the former CEO of Twitter and current CEO of the payments company To block, Jack Dorseyhe hinted that the official response to high inflation is “zero accountability”.

“It’s not the party, it’s the system,” he said.

Speaking to the Wall Street Journal prior to publication, Blerina UruciAmerican economist of the investment management company T. Rowe Price Group Inche said inflation now has “strong momentum across the board” and is affecting both goods and services.

“For me, this is a red flag. The other red flag is the Russian invasion of Ukraine and the rise of COVID in China. These elements jeopardize the materialization of the so-called normalization of supply chains,” he said. Uruci.

Other analysts believe that the high inflation rate in March represents a peak for the current cycle of high inflation.

“We believe CPI will peak in March as the higher effects of the previous year are felt and the pace of overall economic growth slows, which should lead to slower price growth over a period of time. sequential basis this summer, “he said Sam BullardCEO and chief economist of the banking giant Wells Fargoin a Sunday note quoted by US News.

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