As the damage from Friday’s surprise US inflation data continued to reverberate across global risk markets, Bitcoin dropped to its lowest level in over 18 months.
After numbers released on Friday revealed that US inflation hit a fresh 40-year high in May, traders are raising their bets on a quicker speed of Federal Reserve tightening. Risk assets, such as cryptocurrencies and equities were sold off as a result.
Gas, food, and most other products and services all increased in price in May, pushing inflation to a record four-decade high and leaving American households with no reprieve from mounting costs.
Prices increased by 1% month over month from April to May, substantially quicker than the 0.3 percent increase from March to April. Much higher rates for everything from plane tickets to used autos contributed to the increase. The so-called core inflation rate was also raised as a result of the price increases.
The data released on Friday fueled concerns that inflation is extending beyond energy and products, where snarled supply lines and Russia’s invasion of Ukraine have pushed up prices. Stock prices also plummeted as a result.
Due to increasing liquidations, worldwide crypto volume climbed by 28.45%. Buying in dips, or investors attempting to average down a stock whose price is decreasing, is one of the most common ways for stock market investors to lose money.
The Fed expects that by dramatically boosting borrowing costs, it will be able to slow spending and growth enough to keep inflation in check without sending the economy into recession.
Groceries cost over 12% more last month than they did a year ago, the highest increase since the 1970s.
In a job market that remains strong, with low unemployment and near-record job postings, employers are under enormous pressure to raise wages. However, while average incomes are rising at their quickest rate in decades, most employees are still unable to keep up with inflation.
During the pandemic, many people acquired savings as a result of government stimulus handouts, and they are now forced to use that savings to pay expenses.
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