Crypto Market to Plunge Hard, Inflation Rise Can Have a Brutal Effect on Crypto Prices

The crypto market was in joy as the broader market had entered the recovery phase where major cryptocurrencies had gained their key price levels.

However, today the crypto space has yet again stepped back on a bearish pull. This has made experts and analysts anxious as they speculate if this could be the start of a bear market and whether the inflation has spiked.

Bitcoin had recently gained $24,000 level and now the currency has even lost $23,000 level and is trading around $22k area. Even the second largest currency, Ethereum, which had reclaimed the $1700 mark, is now hovering around the $1600 level. Along with these two major cryptocurrencies, others have also made a significant loss.

Adam Parker, who is the CEO and founder of Trivariate, while in conversation with CNBC, claims that the Consumer Price Index will stay high. These CPI numbers play an important role in the financial world as they are used by the Federal Reserve to curb inflation.

As per Parker, the rentals in the housing market have seen a rise of 12% yearly, and for crypto and stocks to rally the CPI should remain below 2. He further states that for CPI to drop below 2, the economy should see a massive recession.

Meanwhile, Morgan Stanley’s Chris Toomey also believes that inflation is still under control. He then talks about global GDP which is a matter of global concern. As per Toomey, currently, inflation is considered structural rather than transitory.

Another Interest Rate Hike Will See Bear Market?

If at all the economy is hit with inflation, then the crypto market will see a huge downfall. The recent reports claimed that inflation is at 9.1% and to hold back this, the Fed increased the interest rates by 0.75%. This move pulled down the global crypto market.

However, though July’s CPI numbers suggested increased inflation, it did not have much effect on the crypto market. According to analysts, this was because the market had already experienced a downfall with the previous CPI data and interest rate hikes.

On the other hand, if the market sees another negative CPI data along with an interest rate hike, the crypto market will be dragged into a bear market.