Inflation numbers that are rising are well-supported by increasing interest rate announcements by central banks across the globe. The aggressive stance of the majority of governments has proved to be difficult for consumers.
The US Bureau of Labor Statistics recently published the Consumer Price Index figures. The September inflation rate dropped to 8.2 per cent, which is the lowest level since February of this year.
The data released will largely determine the US Fed’s decision-making on sticking to its aggressive tightening of monetary policy at its meeting in starting of the month of November. The central bank is believed by experts to will announce another 75 basis points rate increase at the next meeting.
It was the Minutes of the meetings most recent were released on the same day as they were noted,
An early Bitcoin sale could have a negative impact on the market
Just prior to that CPI announcement, Bitcoin had slipped below $19k. In the wake of fears of “going to the top,” cryptocurrency expert Michael van de Poppe highlighted that cryptocurrency markets are “selling out.” He also said that this could be the “most talked about information point” in the past year.
Following every release, the price of Bitcoin has fluctuated in the short term. In the majority of cases, when the CPI was higher than anticipated, BTC has fallen an average of 4% within the first 30 minutes following the announcement. In contrast, when the CPI is lower than the consensus, the asset has increased by an average of 2.2%.
Banking sector to receive guidance from the Fed
Federal Reserve Vice Chair Barr said Barr that US Federal Reserve is working with the OCC as well as the FDIC to bring attention to cryptocurrency-related concerns to the institutions they supervise. The Fed strives to steer the banking industry.
He states,
“it is important for banks to be aware of the increased risk of liquidity they could face from specific types of deposits made by crypto-asset firms.”
Barr added his belief that efforts by the Fed do not intend to stop banks from providing access to banks and banking products and services for businesses that are involved in crypto-assets and said that their mission ” is focused on making sure risks are appropriately controlled.”
The Barr Report calls for the regulation of stablecoins
In addition to highlighting other types of activities related to crypto-assets that require regulations, Barr stated that highly volatile crypto-assets could be undoubtedly not an alternative to fiat currency. Stablecoins, in his opinion, offer greater potential to be used as private money.
“Because crypto-assets have proved to be so volatile, they are unlikely to grow into money substitutes and become a viable means to pay for transactions. However, stablecoins, which purport to maintain a stable value, have greater capacity to function as privately issued money.”
The Road Ahead
The Crypto market does not seem to come out of the prolonged winter anytime soon. Until yesterday, the sentiment over the CPI announcement was positive and expected to result in a rebound of the global and crypto markets. However, things went opposite to the expectation taking down the price of the top cryptocurrency, Bitcoin, below $18,500. The total crypto marketcap also nosedived, sinking below $850 billion for the first time since July. This massive shrink in total crypto market capitalization has again raised question that is crypto dead again? Although Bitcoin has been through such phases in past and only emerged more stronger, this time it may take more time than expected to emerge out of this deadly crypto winter.