BTC Crash affected by CPI
CPI data has affected bitcoin due to the unexpectedly high inflation. The Fed has tightened its inflation control measures and raised the key rate to 0.75%, which resulted in an immediate 10% crash in the price of bitcoin (BTC), following the 23% retracement brought on by the aforementioned CPI data.
This week’s inflation numbers could have a similar impact on the bitcoin market if it comes in higher than expected. Unless there is unexpected positive CPI data that will be released tomorrow, Bitcoin is unlikely to exhibit any significant moves on the market given the pressure from the U.S. dollar, which is continuing to strengthen versus other foreign currencies.
Higher Inflation, Stock Market Fluctuated
The stock market is considered one of the instruments that can have both positive and negative effects when inflation rises.
When inflation rose, there will be a higher chance of a recession. It has been proved by how inflation was very high for the two consecutive periods of economic growth.
This could change investor attitude to a risk-off mode, as it should, leading to a change in investment strategy and style. High-dividend stocks are a secure investment during periods of high inflation because they make up for the decline in purchasing power with sizable passive income.
However, High levels of demand make it even easier for businesses to pass costs to consumers, which is usually what we’re seeing, so high inflation is not always bad news for the stock market.
Also, a recent analyst from the Leuthold Group stated that when inflation is high, usually stocks will perform well right after the peaks.
During economic uncertainty, Gold tends to spike higher
Gold is considered a valuable commodity, and the price of gold is affected by financial markets all over the world.
The price of gold is relatable to US dollars (XAU/USD), and it typically rises as stocks and bonds fall in value. The metal always has its good value and is considered a reliable asset.
The movement of the USD value, which is often affected by inflation, has assisted the movement of Gold.
The CPI for this week will be released on Wednesday, which might generate some move in Gold.