The crypto market has seen its most extensive greens after a long time of downtrend in the market. The event followed the positive report on the CPI (Consumer Price Index) given by the US Bureau of Labor Statistics in July. This announcement became the main impetus for Bitcoin and Ethereum prices.
The CPI from July fell below the forecast 8.5%, according to previous reports. However, this does not seem to contribute positively to potential inflation. In this regard, experts are now expressing concern about what they see as sticky inflation.
Enuring Investments LLC CEO Michael Ashton has revealed what he believes is the reason for the CPI reduction.
According to Ashton, the significant factors that contributed to the reduction in the CPI were flexible items. He said some examples of such flexible items are clothing and airline tickets.
However, this will not affect some difficult areas of the economy, he added. For example, the prices of certain complicated economic parts, such as rent, will continue to increase regardless of the reduction in the CPI.
He further said that there would be a continued acceleration in the sticky inflation rate. Furthermore, there is no promise that rising inflation in the US economy will stop anytime soon, he added.
Impact of inflation on crypto assets
Currently, there is a strong uptick in the digital currency industry. This is an effect of the positive report of the CPI (Consumer Price Index).
Furthermore, many altcoins, including Bitcoin and Ethereum, have reached a new high after a long period of bearish price movements. Bitcoin is currently trading at a price below $24,000.
Meanwhile, Ethereum is trending below $1,900. This is the result of strong market sentiment in the industry.
Overview of data from the US Bureau of Labor Statistics.
The consumer price index is an effective indicator that provides accurate information about the state of inflation in the US economy. The US department in charge of CPI reporting is the US Bureau of Labor Statistics. Generally, this department provides reports on the CPI every month.
Meanwhile, the department that controls the high inflation in the country is the Federal Reserve. This group achieves its objectives through increases in interest rates and quantitative adjustments.
Reports in June cited falling cryptocurrencies and a severely aggressive Federal Reserve due to the excessive rise in the CPI. This also brought BTC to one of its worst states at the time. Also, the stock markets were not left out during this period, as many stocks fell at different prices.
Therefore, it is not advisable to invest in digital currencies at this time, Ashton warns crypto investors. This is due to the insecurity of inflation hedges.
In this sense, he advised investors to opt for tangible assets. He cited examples of real assets: real estate, agriculture, precious metals, and energy.
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