📈US inflation has risen again, will the cryptocurrency market be affected?
The latest economic data shows that the US inflation rate has risen again, with the core PCE inflation rate reaching 2.8% in October. This number is not good news for the Federal Reserve, which may affect their monetary policy, and the cryptocurrency market may also be affected.
This inflation data is the main indicator used by central bank policymakers to measure inflation. Kobeissi Letter tweeted that the Fed's nightmare has arrived because the latest data shows that all three inflation indicators are rising.
The cost of living in the United States has been increasing since July, and now inflation has stabilized above the Fed's 2% target, which will also affect many aspects of the economy, including monetary policy, consumer behavior, corporate decision-making and financial market performance.
The core CPI has remained above 3% for 42 consecutive months, the longest consecutive rising cycle since the early 1990s. This means that we may be in compound inflation.
Moreover, Trump's proposed tariffs on China, Canada and Mexico may also push up consumer prices and inflation. In this regard, Goldman Sachs economists predict that if the tariff measures are implemented, core PCE prices may rise by 0.9%. Meaning that the cost of goods and services purchased by consumers in their daily lives may increase.
The view is that if inflation continues to rise, the Fed may stop cutting interest rates or even start raising them. This is generally not good news for risky assets, such as cryptocurrencies, because low-risk cash-related investments will become more attractive, resulting in less liquidity in the venture capital market.
Despite this, the cryptocurrency market continued to rise this week, with the total market value reaching $3.5 trillion again, mainly driven by Ethereum and altcoins. From this, it can be seen that the new government's support for cryptocurrencies and the investment of major institutions may be enough to offset the Fed's hawkish shift.
What do you think of the US inflation data and its impact on the cryptocurrency market? Do you think the interest rate hike will affect your decision to invest in cryptocurrency? See the comments section!
