U.S Inflations Records 40-Year High Suppressing Crypto Market Further

• The Federal Reserve is expected to raise the interest rate by 50 basis points.
• The Terra ecosystem crash caused a ripple effect across the market.

The Consumer Price Index (CPI) rose by one percent between May and June, bringing its year-over-year gain to 8.6 percent, while the crypto sector continues to struggle with a bear market. The CPI has increased at its quickest rate in 40 years, indicating growing inflation. According to this data, it is also a severe concern for the economy of the United States. On the other hand, core inflation increased by the same 0.6% as in April.

All-eyes on FOMC’s Meeting

Higher costs for consumers are a severe problem, even if the CPI is not the Fed’s favored inflation indicator. The FOMC’s meeting next week will undoubtedly be dominated by the CPI data, and whatever decision the committee makes after that might be affected.

According to reports, the Federal Reserve is expected to raise the interest rate by 50 basis points. As long as inflation doesn’t slow, the Fed may opt to raise rates sooner rather than later. The crypto market, which has had a challenging year, might be heavily impacted if interest rates rise further. To put things in perspective, the Terra ecosystem crashed, causing a ripple effect across the market.

CMC statistics show that the cryptocurrency market has lost more than 4% of its value in the previous 24 hours. The Bitcoin price fluctuates between $29 and $30k, while other major asset classes are also experiencing difficulties. As a result of cryptocurrency’s poor performance, some proponents claim that it may be used as an inflation hedge.

CEO Brian Armstrong of Coinbase noted that the current bear market is different from the past because of the greater variety of cryptocurrency applications. However, he thinks that the overall market value of crypto would have to expand by five to 10 times for it to become an inflation hedge.