Crypto market tumbles on Tuesday following the latest inflation release. Bitcoin, Ethereum, and other altcoins turned down after the Bureau of Labor Statistics reported that the U.S. inflation reached 8.3% in August.
The latest figure, despite indicating a lower point than 8.5-percent drop for the period ending July, is not what the market was expecting from.
Investors, indeed, set expectations at 8.1%. The reading came in hot, and now it looks like a big rate rise at the next FED meeting may crush the demand for risk assets.
According to the report, the shelter, food, and medical care indexes increased from July 2022 to August 2022, offsetting declines in the gasoline index. The consumer price index advanced 0.1% after no change in July.
Here Comes The Big Hike
Higher-than-expected August data has pushed all the market on the edge. The S&P 500 dropped 4.3% and the tech-heavy Nasdaq fell 5%. Bitcoin declined 9% to around $20,000 at the time of writing.
Ethereum also dropped by 6.5%, a threatening rate ahead of the upcoming upgrade this week. The worst fall was seen in Ravencoin, which lost 17% of its value in the last 24 hours.
After dropping to a low of $18,500, the world’s largest cryptocurrency defied odds and regained strength, surging to the week’s high of $21,800 last Saturday but the trend briefly reversed after the CPI release.
A gas dump couldn’t erase the fact of a stubbornly high cost of living for Americans. The possibility is connected to additional interest rate hikes at the meeting on September 20-21.
Fed official Loretta Mester expects that the benchmark interest rate will rise above 4% at the beginning of next year and that there would be no decreases.
She is of the opinion that the Federal Reserve will most certainly keep its more aggressive approach to the economy, and she stated: “I do not anticipate the Fed cutting the fed funds rate target next year.”
This is a viewpoint that is similar to the one that was stated by Jerome Powell at the meeting that took place in Jackson Hole on August 28th. The Federal Reserve will not hold back until inflation hits their target level of 2%.
The Merge?
Given the market volatility, Ethereum’s long-anticipated makeover is expected to factor the price pump.
While paying close attention to the Fed’s decision and CPI data, the crypto community has been eager to witness the Ethereum Merge since the beginning of the month.
The Merge is a significant turning point in the development of the blockchain, as it marks the beginning of Ethereum’s full shift from Proof-of-Work (PoW) to Proof-of-Stake (PoS).
The objective is to cut Ethereum’s energy consumption by 99%, which will clear the path for further breakthroughs after the Merge.
In the midst of the hype, Ethereum Name Service is enjoying unprecedented success. In August, Ethereum Name Service announced that it had reached the key 2 million registered domain name mark.
After fewer than one month has passed, there have been more than 300,000 additional recordings added.
A success rate of this magnitude must have been achieved by the ENS while they awaited the Merge in order to account for such astonishing speed.
It normally takes an average of five very long years to reach the million level but in less than 5 months, the goal of two million domain names registered has been substantially surpassed.
Google countdown shows that we’re only less than 30 hours before the upgrade.
Previously, Google Trends, a site that makes it possible to follow with what intensity keywords searched in Google, reported the number of searches for the keywords “ethereum merge” in Google have literally exploded in recent weeks.
While the searches for the term “buy bitcoin” are, on the other hand, stagnating or even dropping slightly.