The July Consumer Price Index (CPI) data, which was released today, shows a slight uptick in inflation. U.S. inflation rose to 3.2%, slightly lower than the expected 3.3%. The Core CPI inflation is currently at 4.7%, also under the anticipated 4.8%. This marks the first monthly increase in CPI inflation since July 2022, and its effects were felt in both the financial and cryptocurrency markets.
The moderate inflation presents an indication of economic stability, but analysts remain divided over its effects on monetary policy and market behavior. Despite the increase, the lower-than-expected results may give the Federal Reserve more flexibility in its interest rate policies. As such, investors are concerned that rising inflation could lead to a slowdown in economic growth.
The crypto market also reacted to the CPI data release. Bitcoin (BTC) saw an intraday fall of 0.33%, testing the 50-day Exponential Moving Average (EMA) in an ongoing consolidation range. Ethereum (ETH) on the other hand, encountered resistance from the 50-day EMA. Ripple (XRP) and Binance Coin (BNB) experienced more significant drops of -1.57% and -0.68% respectively.
The Crypto Fear & Greed Index currently rates market sentiment at 52, which is in the “Neutral” category. This indicates that investors are taking a cautious approach. Overall, the lower-than-expected inflation data may provide some relief to investors, but it remains to be seen whether it will be enough to prevent a sell-off in stocks.
