Leading Cryptocurrency in Bitcoin And Ethereum The latest Consumer Price Index (CPI) dropped several points on Tuesday morning after print.
Shortly after the CPI numbers were released, both bitcoin and ethereum cut back the huge gains made in the week.
Bitcoin, the largest cryptocurrency by market capitalization, is now trading at around $21,450 after falling more than 5% in the last hour. However, it remains up almost 8% over the last week.
According to data from CoinMarketCap, Ethereum is now down more than 6% in the past hour and is currently trading around $1,625.
Traditional markets in the Nasdaq 100 and S&P 500 also dropped 2.7% and 2%, respectively.
What is CPI?
Every month, the Consumer Price Index measures the cost of various goods and services, such as milk and used cars. Economists use these figures as a proxy for identifying inflation. Most recently, the CPI numbers revealed the highest inflation in the United States in the past 40 years. The most recent August numbers were no exception.
Today, the index revealed a growth of 8.3% in the basket of commodities as compared to the previous month of August. This represents an increase of 0.1% since the July reading, suggesting inflation may be stubborn enough to retreat further than expected.
The increase, though modest, would give the Federal Reserve the green light to continue raising interest rates, the central bank’s key tool for cooling the economy. As the Fed raises rates, it becomes more expensive to borrow money, which can lead to lower investments, slower recruitment and ultimately lower spending.
Increases in rates also affect financial markets, which includes crypto.
Today’s CPI report is the final reading ahead of the Fed’s re-meeting on September 20. Chairman Jerome Powell is expected to increase by another .75 basis points again.