T The global cryptocurrency market capitalization appears to have lost its bullish stance again, with the top assets – Bitcoin and Ethereum – having started to give back all their gains. In just one hour, Bitcoin and Ethereum fell 4%.
Bitcoin is down 7% in 24 hours, while Ethereum is down around 6%. At the time of reporting, Bitcoin was trading at $21,761, while Ethereum was trading at $1,740.
Last week was very good for the crypto market following the release of the Consumer Price Index. CPI rose to 8.5% in July, indicating a decline in inflation.
But that hasn’t stopped the Fed from taking a hawkish stance and raising interest rates. The next FOMC meeting is scheduled for September, and the Fed is expected to continue raising interest rates.
According to St. Louis Fed President James Bullard, there is a high probability that the Fed will raise interest rates by another 0.75%, which will help reduce inflationary pressures.
Not Mr. Bullard, even Neil Kashkari, CEO and president of the Federal Reserve Bank of Minneapolis, believes that raising interest rates is important to curb inflation.
Crypto market hit hard
CPI is an excellent predictor of economic inflation. High inflation often accompanies monetary policy by the Federal Reserve to control inflation.
Back when the rate hike in June, markets reacted negatively as first-born currencies had their worst fiscal quarter.
So far, inflation is expected to have started to cool and there will be no further rate hikes. In addition, the U.S. gross domestic product posted negative growth for two consecutive quarters. One can only assume that an unexpected rate hike in September will have a further negative impact on the crypto space.