On Wednesday, January 12, the US reported its highest inflation at 7% in more than four decades since 1982. Well, this is unlikely to have a larger impact on Bitcoin price as it continues continue to trade above $43,500. from the cross of death.
As of press time, Bitcoin is trading up 2.45% at $43,644 with a market cap of $827 billion. As Cointelegraph reported, US inflation will play an important role in determining Bitcoin’s momentum. Although the inflation figure is quite high, it is quite in line with what has been expected. Matt Maley, chief market strategist at Miller Tabak + Co told Bloomberg:
“The fact that inflation numbers aren’t as high as some numbers whisper should help risk assets of all stripes today.”
Inflation largely in-line. OK. https://t.co/JSJNV10hz8
– Alex Krüger (@krugermacro) January 12, 2022
That means that while the Federal Reserve will continue with its quantitative tightening (QT) program, there is a reasonable expectation that it will not become any more aggressive than it currently stands. We are expecting four rate hikes this year in 2022 which could suck liquidity out of the crypto market and thus lead to market volatility.
However, the opposite approach is at the same time true as more and more people are entering the crypto space to receive profits that surpass inflation. As a result, Bitcoin is set to emerge as a strong inflation hedge to come.
Altcoins make a powerful show
The altcoin space is leading a very strong performance. After a bad week last week, Ethereum (ETH) has rebounded above the $3,350 level. Binance Coin (BNB) also recorded a strong 4.5% gain while Solana (SOL) registered a 7% gain, raking in $150 again.
In the top 10, Terra’s LUNA is still a better contender, gaining more than 10% and surpassing $80. The broader crypto market has also gained 4% over the past 24 hours and is now above $2.07 trillion. The end of this week will be crucial in determining market dynamics over the next month.