At its meeting on July 26–27, the Federal Reserve is expected to raise interest rates by 100 basis points, which would be the biggest rise since it began using overnight interest rates as its primary tool for monetary policymaking in the early 1990s. Citizens of the world’s largest economy are upset by high prices, and opponents point the finger at the Fed for its early lack of action as liquidity dries off in the crypto market
Before now, Bitcoin’s price had shown no sign of strength or recovery, and it had been moving in jagged patterns with little overall volatility (with certain exceptions). After a brief rise to the $21K level, the price is gradually falling to retest the demand zone at $18K. Additionally, this zone provides psychological support and coincides with 2017 high.
The Consumer Price Index soared by 1.3% seasonally adjusted and 9.1% over the past 12 months without being adjusted, according to data from the US Bureau of Labor Statistics.
For those who are unaware, the Consumer Price Index (CPI) analyzes the average change over time in the prices that urban consumers pay for a market basket of services and consumer products. It is the most widely used indicator of inflation in the US.
This also led to unrest in the cryptocurrency market, which was somewhat predicted. Surprisingly, Bitcoin at the time of writing traded above 20K, but showed signs of bull exhaustion as investors push to the safe haven currency trading above 20-year high
After US consumer prices increased a faster-than-expected 9.1% in the year through June, Atlanta Fed President, Raphael Bostic told reporters in St. Petersburg, Florida, on Wednesday that “everything is in play.” He responded, “It would mean everything,” when asked if it included raising rates by a full percentage point.
After being criticized for its initially tardy response, the Fed has become aggressively anti-inflation, agitating financial markets and raising the possibility that its policies could send the US economy into recession and likely keep crypto assets’ prices under immense pressure
Even the most powerful players start to worry at the final stage of the crypto bear market and sell their undervalued coins in order to get out of the market as quickly as possible.
As a result, many of these large organizations are currently holding their coins at a loss, pushing some of them to sell before their portfolios suffer even greater losses. The Exchange Whale Ratio, a valuable statistic for monitoring whale behaviour, has seen a sharp increase over the previous few weeks, suggesting that whales have significantly increased their Bitcoin deposits to exchanges.