Bitcoin Surges as US Inflation Rises

Bitcoin, the world’s largest cryptocurrency, experienced a surge in price following the release of the US Department of Labor’s latest Consumer Price Index (CPI) data for February 2023. The CPI, which measures the average change in consumer prices for a basket of goods and services, rose 0.4% last month on a seasonally adjusted basis. The all-items index denoting inflation increased by 6% over the last year, with the Labor Department noting that this was the lowest 12-month increase since September 2021.

The news of rising inflation had a mixed impact on conventional markets, with volatility being reported. However, the cryptocurrency markets reacted positively, with Bitcoin and Ether experiencing surges in price, according to data from CoinMarketCap. This suggests that investors are turning to digital assets as a potential hedge against inflation.

The CPI is calculated by the Bureau of Labor Statistics and is used as an indicator of inflation. It reflects the spending patterns of consumers on items such as food, housing, transportation, clothing, medical care, and recreation. The index is used to adjust wages, benefits, and social security payments for inflation, measure economic performance, and set monetary policy.

The US Labor Department’s statement notes that the shelter index was the largest contributor to the monthly all-items increase, accounting for 70% of February 2023’s CPI increase. Indexes for food, recreation, household furnishings, and operations also contributed. The food index increased by 0.4% last month, while the food at home index rose 0.3%. The energy index decreased by 0.6%, while natural gas and fuel oil indexes also declined in February.

The rise in inflation has been attributed to a number of factors, including supply chain disruptions, increased demand for goods and services, and rising energy costs. These factors have put pressure on businesses to increase prices, which has contributed to the overall rise in consumer prices.

The news of rising inflation comes at a time when the global economy is still recovering from the effects of the COVID-19 pandemic. Many countries are still grappling with high levels of unemployment and reduced economic activity, which has led to concerns about the sustainability of the recovery. The rise in inflation adds another layer of uncertainty to an already challenging economic environment.

In conclusion, the rise in inflation has had a mixed impact on financial markets, with cryptocurrency markets experiencing a surge in price. This suggests that investors are turning to digital assets as a potential hedge against inflation. While the rise in inflation is a concern, it remains to be seen whether it will have a significant impact on the global economy in the long term.


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Anti-Privacy Regulations Pose Risks for Crypto Investors, Bank of America Says

A Bank of America cryptocurrency report warns of the risks and potential market disruption from anti-privacy government measures.

Cryptocurrencies “challenge the ability of governments to levy taxes and to control capital flows more broadly,” according to a recent report from Bank of America Securities obtained by CoinDesk. Uncertainty over how the U.S. governments will act to limit these use cases presents an key risk for cryptocurrency investors.

“Encrypted private wallets with digital assets that can be transferred across borders would seem to undermine

the monetary sovereignty of every nation-state,” the report says.

In an “extreme case,” regulators could simply ban all institutions and intermediaries from transacting with cryptocurrencies. Or the government could increase customer information reporting and access requirements for cryptocurrency exchanges, which the report describes as a more plausible possibility.

Also, support for central bank digital currencies (CBDCs) are not “just a form of payments competition,” the report says. “They are also an effort to replace private digital assets with publicly-controlled ones.”

How effective state-run counter-privacy measures will be is a separate question. The authors admit that no matter how burdensome, anti-privacy regulatory changes “might instead be meaningless”. Users committed to transaction privacy “could potentially create a second ‘truly private’ wallet to which they send currency from their now-public wallet, and continue to make anonymous cross-border transactions.” “At some threshold, banning private digital assets would become too politically risky, too disruptive to constituents,” the report says. But carefully targeted regulations designed to restrict privacy could impose a “serious burden” on users.

Bank of America’s analysts said they are closely watching the risks and expected responses by the US government to limit private cryptocurrency transactions. And given “uncertainty about how cryptocurrency markets would react to a reduced-privacy environment,” the report suggests investors should “approach digital assets cautiously.”



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$2.3 Billion Liquated on Crypto Exchanges as Bitcoin Price Crashes By $5.4k In Minutes

Over the last 24 hours, the entire crypto market suffered a flash crash, losing about $110 billion in the market cap and sending the Bitcoin price below $30,000.

During the flash crash, about $190 million in long positions were liquidated on Binance and an estimate of $2.3 billion was liquidated across all cryptocurrency exchanges in total. Bybit crypto derivatives trading platform also indicated that over 150,000 traders were liquidated during such a particular time frame.

At first, things were looking dull, but the crypto market has managed to recover significantly. Bitcoin’s value declined to $28,130 from $33,600, but has managed to recover and now trading at around $32,500. The entire market has quickly recovered and the current market capitalization sits at $884 billion according to CoinMarketCap.

Several crypto analysts believe that Bitcoin should pull back from its current trading levels to maintain a healthy uptrend.

While the previous dip was massive and something extraordinary in March 2020, other steeper dips in 2017 had an enormous impact on the leading cryptocurrency. However, Bitcoin and cryptocurrencies have managed to recover rapidly. This makes investors have confidence in the market and therefore are aiming for higher highs.

Putting this into consideration, it is possible that the next dip will come even faster and everyone now expects that.

Bitcoin bulls have defended a critical support level in the form of the 12-day EMA (exponential moving average) on the daily chart. Therefore, provided that Bitcoin price stays above the 12-day EMA and the 26-day EMA on the daily chart, the uptrend would remain intact. However, a slip below the 26-EMA would be a concern and indicate a shift in momentum.

The Ethereum price has also climbed to hit $1,000 for the first time since January 2018 and peaked at $1,162 before plummeting. The current price is trading at $1,100 as the bulls hope to continue with the upward trend.

The TD Sequential indicator has just presented a sell signal on the 6-hour chart. Similarly, the trend indicator shows that the crypto is on the verge of doing the same on the 9-hour chart. If both signals are confirmed, then the Ethereum price could see a fall towards the psychological level at $900 again.

Meanwhile, in the previous month, Litecoin has been one of the few coins that have outperformed Bitcoin, increasing its price by over 150% reaching $173, which is still down from its record high of $360 registered on December 19, 2017.

Image source: Shutterstock


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Bitcoin (BTC) $ 27,810.45 2.19%
Ethereum (ETH) $ 1,892.65 2.76%
Litecoin (LTC) $ 91.19 2.04%
Bitcoin Cash (BCH) $ 116.46 2.00%