According to US Consumer Price Index (CPI) data issued on Friday, December 10, inflation in November was at its highest level in 40 years, at 6.8%. Inflation climbed at its sharpest rate since 1982, according to the Labor Department, limiting economic growth and upping the stakes for the Federal Reserve, which is already under criticism.
CPI data for November was anxiously awaited by both cryptocurrency and traditional financial professionals, with estimates forecasting a year-on-year increase of at least 6.7 percent, and some as high as 7%. In the end, with 6.8%, the results were substantially in line with expectations. Surprisingly, the CPI’s most recent inflation readings put it at its highest level in nearly 40 years.
Bitcoin’s market capitalization drops by $380 billion
On November 10, Bitcoin was trading at $68,622 and had progressively plummeted to $48,199, a decline of 29.76 percent. Furthermore, the asset had a market capitalization of $1,29 trillion just a month ago and now has a market capitalization of $910 billion, implying that around $380 billion has been removed from Bitcoin’s market capitalization in the last month.
According to CoinMarketCap data, Bitcoin is now trading at $48,199, down 0.96 percent in the last 24 hours and 14.7 percent over the preceding seven days in response to the inflation news.
Notably, Bitcoin hit a low of $47,627 on December 10 before surging higher on the back of the inflation report. However, after trading as high as $49,899, the asset collapsed in less than ten minutes, shedding more than $1,000 in market capitalization.
In response to the results, Bitcoin advocate, entrepreneur, and investor Anthony Pompliano tweeted: “Bitcoin rallying on announcement of the highest inflation in 40 years.”
Additionally, he noted its impact on the market following the news: “Inflation is at 6.8%, which means that a very large portion of US pension funds has achieved a negative real rate of return on their investment portfolio over the last 12 months. Do not count on your pension for retirement. Educate yourself on investing.”
Rager, a leading crypto trader, noted: “Even with the highest CPI in decades, they weren’t as high as expected – which in the end is actually a good thing for how the Fed would have reacted if otherwise- impacting the crypto market That and it also gives comfort in knowing you hold a hedge to fiat.”
Investors will keep a close eye on the markets over the next several days to see if volatility swings occur in either direction as a consequence of the latest news.
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