The Crypto market climbed on Tuesday after Jerome Powell, the chair of the Federal Reserve, comforted investors the Fed will enhance tactics against the current high inflation, signaling the Central Bank may reduce its balance sheet this year.
Bitcoin went up as high as $43,106 on Tuesday, leading the crypto market at $2.12 trillion, up 3.8% from yesterday. At the time of publication, the most valued cryptocurrency was changing hands above $42,800, up over 2% in the past 24 hours, according to CoinDesk data.
Most other major cryptocurrencies also rose on Tuesday. Ethereum was up 4.6% to $3,240. Oasis Network was the biggest gainer in the top 100, rising 23.6% to 46.3c. Fantom and Safemoon were both up around 18%. Near Protocol was up 11.7% to $18.01, after hitting another all-time high yesterday, of $18.19. Internet Computer was the biggest loser, down 9.7% to US$33.13.
All eyes tonight will be focused on the US Consumer Price Index data call for December, to be released at 8.30 am EST on Wednesday (12.30 pm on Thursday, AEDT).
The consumer price index is released by the Labor Department Wednesday and is expected to show headline inflation jumped by 7%, its fastest rate since 1982.
Bitcoin briefly spiked to an all-time high before correcting, when the US Bureau of Labor Statistics reported in November that consumer prices had surged by an annualized 6.2% the month before. The December 10 report that consumer prices had risen 6.9% in November also led Bitcoin to quickly soar by US$1,000.
The Federal Reserve is already on a path to raise interest rates to battle rising prices. A hot number should justify the Fed’s policy shift. Diane Swonk, Chief Economist at Grant Thornton, claimed:
“It’s still hot, hot, hot, and it’s important because we’re now where the Fed worries about that 7% number getting baked into wages and getting more entrenched”
In the past two months, Bitcoin’s price experienced high volatility after the CPI data release. The biggest crypto is the most oversold since Dec. 10. Typically, oversold readings precede price recoveries, similar to what occurred in late September. This time, price reaction to indicators has been delayed. However, Jurrien Timmer, director of global macro strategy at Fidelity, tweeted that The Fed’s policy on inflation has had strong support to Bitcoin surging.
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