Tuesday saw a decline in the price of bitcoin as statistics revealed that U.S. inflation increased more than expected in August as the report indicated a 0.1% month-over-month increase in overall inflation.
Despite gas prices hitting multi-month lows and the property market slowing, core inflation increased by 0.6% month over month and is currently at 8.3% for the year.
After a quick period where Bitcoin saw a small rally up to $22,000 last week, today’s announcements about the United States inflation made the cryptocurrency dip once again.
This is the latest indication to traders that the Federal Reserve will keep tightening financial conditions, which is due to affect cryptocurrencies.
Before the announcement of the U.S. consumer-price index (CPI) for August, Bitcoin was trading in the green. In the past couple of days, the largest cryptocurrency by market capitalization managed to bounce back from a harsh dip to $18,000, reaching the $22,000 mark yesterday.
Bitcoin started the day at around $22,616. However, after the CPI data report, the cryptocurrency dropped by nearly 12%, currently trading at around $20,172.
Disappointing News For Crypto
The CPI data report is certainly not what investors were looking for.
Many investors believed that the CPI report on September 13 would come in weaker than expected.
After a report about a decrease in job growth rates briefed on September 4th, the data appeared to indicate that the Federal Reserve’s interest policies were beginning to have an effect on the overall American economy.
However, the CPI indicates that the Federal Reserve could continue to raise interest rates in order to continue fighting inflation on U.S. soil.
Cryptocurrency traders anticipated a breakout in the price of Bitcoin (BTC), and Ether (ETH) given a favorable inflation report were to be given, however, the opposite happened.
Other Currencies Also Affected
While Bitcoin was the currency that suffered the most from the CPI report, other currencies were also affected by the data.
Risky assets naturally declined as well, as the price of bitcoin lost more than 50% of its weekend gains with a 9% retreat to $20,350.
Ethereum, currently the most talked about cryptocurrency due to the upcoming merge into proof-of-staking also saw a 7,20% drop. Dogecoin dropped by 5%, Polkadot by 5,67%, and Polygon by 7,40%.
Solana was one of the most affected currencies, experiencing a drop of nearly 10% in less than 24 hours.
Meanwhile, the S&P 500 and Nasdaq plummeted 2.9% and 3.6%, respectively, while the Dow dropped approximately 2.6%.
