It’s been a tough few weeks for cryptocurrency markets. After a strong start to the year. Prices have been in freefall since mid March. As the global economy grinds to a halt due to the coronavirus pandemic. The sell-off has gathered pace in recent days, with bitcoin now trading below $4,000. And most other major digital currencies also in the red. The market value of all cryptocurrencies has fallen below $140 billion. It’s the lowest level since September 2017. The latest drop comes after the U.S. government’s much-anticipated inflation report failed to meet expectations. Dashing hopes that stimulus measures from central banks and governments would boost prices. If you want to trade Bitcoin, click here for More info.
What Causes a Crypto Market Dip?
There are a few possible explanations for why the crypto markets would dip after a disappointing inflation report. One possibility is that traders were disappointed with the report and sold off their assets in response. Another possibility is that the report caused a loss of confidence in the crypto markets, leading to a sell-off. It’s also possible that the report simply wasn’t as bad as expected, and traders sold off their assets in anticipation of a worse report. Finally, it’s possible that the report was actually good news for the crypto markets. But traders sold off their assets anyway due to market uncertainty or other factors.
It’s also possible that the crypto markets dipped due to a combination of factors. For example, if the inflation report was disappointing and there was also news of increased regulation or a hack that could lead to a sell-off.
It’s important to remember that the crypto markets are highly volatile and can move up or down in response to news or events. So, while a disappointing inflation report may have caused the markets to dip. It’s also possible that they would have dipped anyway due to other factors.
Inflation Surge not Quiet
The Consumer Price Index for Urban Consumers (CPI-U) rose 0.4% in October, the biggest increase since February, after a 0.2% gain in September. The core CPI, which excludes volatile food and energy prices, climbed 0.1%, following a 0.3% rise in September.
The increase in the CPI was driven by a surge in inflation for housing and utilities, which rose 1.0% in October after rising 0.5% in September. Food prices also increased, rising 0.4% after remaining flat the previous month. Prices for apparel, medical care, recreation, and transportation all fell in October.
The inflation report was disappointing because it showed that inflation is still below the Federal Reserve’s target of 2%. While the Fed has been patient with raising interest rates because of low inflation. This report increases the pressure on the central bank to start hiking rates sooner. Rather than later to prevent inflation from getting out of control.
What is the inflation report?
The inflation report was a much anticipated event for the crypto markets, however it ended up being a bit of a disappointment. The report showed that prices had actually fallen slightly in the past month, which was contrary to what many analysts had been expecting. This news helped to push the markets down towards their year lows.
Future of crypto markets seems uncertain
Just when it looked like things were starting to rebound, the crypto markets have taken another turn for the worse.
This time, the catalyst appears to be a disappointing inflation report from the US Bureau of Labor Statistics. The data showed that inflation in the US was lower than expected in August. Which has led to concerns that the Federal Reserve may not be as aggressive in its stimulus efforts as some had hoped.
This news has caused a sell-off in riskier assets like stocks and commodities. It looks like cryptocurrencies are feeling the brunt of the selling pressure as well. Bitcoin (BTC) is currently down over 4% on the day, while Ethereum (ETH) is off by nearly 8%.
With prices falling and no clear end in sight, the future of crypto markets seems uncertain at best. This latest setback could be enough to push even more investors out of the space, which could lead to further losses down the road.
Conclusion
Overall, the disappointing inflation report led to a dip in crypto markets towards a 2 year low. While this is not great news for those invested in cryptocurrencies, it is important to remember that the market is still young and volatile. This means that there will be ups and downs, but overall the market has shown promise and should continue to grow in the coming years.