A new inflation report is expected to show rates rising approximately 6.5 percent in September, roughly .2 percent higher than what occurred in August. This, per financial institutions like JPMorgan, could cause further falls in assets like stocks and crypto units, which could drop five percent more in the coming weeks once the results are in.
Inflation Is Still Pretty Bad
Things have been bad as of late, but now it looks like they’re about to get worse. The rate of inflation in the United States is at an all-time high, and the prices of things like food and gasoline are through the roof. As a means of fighting inflation, the Federal Reserve has been put in a position of enforcing rapid and dramatic rate hikes that have done little to offset the damage.
Rather, all we’re seeing is the country falling further and further into disarray. Assets like bitcoin have fallen by more than 70 percent from their all-time highs (many of which were achieved in November of last year) and people can no longer afford homes or cars because the interest rates are out of control. It’s a sad and ugly situation.
The discussion surrounding inflation from JPMorgan is a reiteration of what was recently mentioned by its CEO Jamie Dimon, who stated that the Fed did too little to fight the ongoing economic crisis. In addition, he also claimed that the agency acted too late, and that the U.S. is now in danger of entering recession territory, which could wreak havoc on assets and cause further drops exceeding 20 percent.
Florian Giovannacci – head of trading at Covario – explained in a recent statement:
A higher/lower CPI could easily give us a -3 percent/+3 percent on equity, and risk-on assets such as cryptocurrency would react instantly with high correlation.
Pablo Jodar – a crypto analyst at Gen Two – also threw his two cents into the mix, claiming that the recent inflation report could be the tool that gets bitcoin and its altcoin cousins to (at least minimally) break out of their current slumps. Mentioning that 2022 trading patterns were similar with those of 2018, he explained:
Soon after, it dropped another 50 percent to $3,000. It stayed at that level for several months until the bull market started again. If the CPI data is strong, which I think it will be, bitcoin will see another drop to $17,000.
More Price Falls in the Books?
Nauman Sheikh – head of protocol and treasury management at VC investment firm Wave Financial – said:
This is against the backdrop of extreme bearishness in sentiment indicators and positioning, and the rally should last into the start of the Q3 earning season.
The last time an inflation report was released, bitcoin – which had been trading for around $22K following a mild rally – fell to roughly $19K.