CPI(CAPITAL PRICE INDEX). This is the measure of the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services.the instrument to measure inflation. It is used to estimate the average variation between two given periods in the prices of products consumed by households.When the CPI is rising it means that consumer prices are also rising, and when it falls it means consumer prices are generally falling. In short, a higher CPI indicates higher inflation, while a falling CPI indicates lower inflation,
HOW THE CPI AFFECTS FOREX.
Higher inflation in the form of a higher CPI naturally makes an individual unit of currency worth less, as there are more units of that currency needed to buy a given item. But more importantly, as with the NFP and GDP, when the CPI changes, central bank monetary policy may follow suit.The reason why gold does not always react to the rises in the CPI is that the yellow metal is affected primarily by strong increases in inflation, while moderate increases in inflation or declining inflation do not materially impact the price of gold in either direction.
STAGES OF CPI
You are spending more than planned. For example, a CPI of 0.5 indicates you have spent twice the sum you should have by a certain point in time. On the other hand, a CPI of 2 means you have spent only half the sum you should have at this point. While a CPI of 1 means means that the project is performing on budget. A CPI of less than 1 means that the project is over budget.If the ratio has a value higher than 1 then it indicates the project is performing well against the budget.
EFFECTS ON CRYPTO
The higher the CPI, the higher the pressure on cryptocurrencies. If the CPI increases and decreases at a significant and quick rate, it's a sign of volatility in the crypto market.
when there is inflation.the overall supply decreases, the intrinsic value of the currency increases, and its purchasing power goes up accordingly. This makes deflationary cryptos good choices for longer-term investing. Just because BTC has an increasing intrinsic value does not mean that its market value will not decrease.
Consequently, when news of inflation strikes, the Federal Reserve will likely enact a dual mandate. Policy interest rates will go up, and there will be monetary tightening. As a result, assets (including crypto like Bitcoin) will see a price decline.if there is any correlation between the CPI rising and Bitcoin's price, it is negative. If consumer prices increase, Bitcoin's price usually falls.
Bitcoin's price is primarily affected by its supply, the market's demand, availability, competing cryptocurrencies, and investor sentiment. Bitcoin supply is limitedâthere is a finite number of bitcoins, and the final coins are projected to be mined in 2140. For cryptocurrency investors, inflation is seen as a positive factor influencing the price, as evidenced by the previous all-time highs of $60,000 and above that occurred during a period of monetary expansion and increasing inflation in 2021. However, the current situation is different because inflation is making a comeback while the Federal Reserve has been effectively reducing liquidity in the system. As a result, the impact of inflation on cryptocurrencies remains uncertain.
BITCOIN is the king of all crypto. what ever affects it affect other cryptos like Ethereum and the whole crypto market .
REMEMBER EVEN DICK RISES AND FALL , TILL A NEW BABY IS BORN.. Kindly make your own research too.
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