Following the release of the most recent Consumer Price Index (CPI) report, the top two cryptocurrencies on the market, Bitcoin and Ethereum, both saw modest price increases.
The report is one statistic used to determine inflation in the economy and evaluates the rate of change for the price of a basket of items, such as milk and used vehicles.
This month, prices for this basket of items increased by 0.1%, a tiny down from the previous report's pace of 0.4% and evidence that inflation is definitely slowing down.
Over the last 24 hours, Bitcoin has increased by almost 4%, trading at about $17,600. Ethereum increased even further, rising over 6% on the previous day to trade at about $1,320. The top ten cryptocurrencies also saw significant gains from XRP (4%), Dogecoin (5%), and Polygon (4%).
The Federal Reserve often responds by raising or reducing interest rates when these numbers reveal the level of inflation in the American economy. The Fed has recently increased rates at an unprecedented rate in an effort to control inflation. It is expected that the Fed will continue to hike rates, perhaps not as aggressively, in light of recent pronouncements from the Fed and evidence that inflation is decreasing.
The Federal Reserve is still closely monitoring Bitcoin and the cryptocurrency market. Photograph: Shutterstock
As the Fed Chair signals a slowdown in rate increases, bitcoin and ethereum rise.
Following remarks made in a speech by Federal Reserve Chair Jerome Powell that December is likely to see lower interest rate increases, bitcoin and the larger cryptocurrency market surged on Wednesday.
Small businesses, people, stocks, and even cryptocurrency are all impacted by rising interest rates. The cost of borrowing from banks rises as interest rates rise because debt becomes significantly more expensive. Cash in savings accounts can start producing an attractive interest concurrently with far lower risk than the stock market.
When a result, the economy slows down as rates rise because investors are less willing to transfer money around freely in search of higher returns.