Bitcoin and Cryptos Trend Higher as July Inflation Rate Cools to 8.5%

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  • The official Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics released this morning shows that July's inflation rate was 8.5% higher than the prior year, but lower than economic experts expected.
  • The lower CPI was driven primarily by lower fuel prices at the pump, but inflation still remains at 40-year highs, suggesting higher rate hikes by the Fed in coming months.
  • On that economic news, the cryptocurrency market was up and every crypto in the top-100 ranking was pricing higher, according to CoinMarketCap.

The government reports that year-over-year inflation rose at a slower pace than expected last month. Experts thought it would hit 8.7%, but it was 2 basis points lower.

Today, the U.S. Bureau of Labor Statistics published the Consumer Price Index (CPI), also known as the rate of inflation, which increased 8.5% for July compared to July 2021. While the 8.5% was lower than financial and economic experts were expecting, it was still higher than we've seen in the past 40-year range. The number suggests that the Fed's recent string of short-term interest rate hikes to make borrowing money more expensive, and thereby slowing the economy, will likely continue.

At press time, the value of the cryptocurrency market overall was up 3.52% at $1.14 trillion. Each of the top-100 digital assets ranked by market cap is also trading in the green across cryptocurrency exchanges, according to CoinMarketCap. And the most valuable crypto, Bitcoin, was up 3.17% over the past 24 hours and reached $24,025.21.

While lower that expected, it's higher than the Fed wants

Even though this latest monthly inflation increase was 2 basis points lower than predicted, it's still higher than the Federal Reserve wants to see. This "lower high" will likely force the Fed to continue its aggressive monetary policy. In July, the Fed increased the short-term interest rate by 0.75% to try and cool the red-hot economy. The Fed also stated it would continue to take appropriate steps as necessary but would be reluctant to share the size of rate hikes in advance.

The total trading volume across crypto exchanges is up 11.42% over the past 24-hour span. That could signal a growing interest in the crypto market and the potential for higher returns due to the deep discounts across the digital asset sector. We'll have to wait and see if this inflation rate is the first sign of an economic recovery or a harbinger of a deeper economic downturn.

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