For keen observers of the cryptocurrency market, seeing macroeconomic news and reports affect bitcoin and the general market is not strange. In the same vein, bitcoin exert so much influence on other coins. Anytime bitcoin’s price goes down, alternative cryptocurrencies (altcoins) follow suit. The same happens when the price of Bitcoin rallies.
On Thursday, the United States Labor Department reported that the consumer price index had jumped 7.5% since last year. The 7.5% figure is the highest inflation rate the CPI has recorded since 1982, making it a 40-year YoY high.
The cryptocurrency market reacted negatively to the report. Bitcoin took a 3.5% dip from around $45,000 to $43,400 before rallying back to $45,150 a few hours later. Similarly, Ethereum fell from around $3,250 to $3,100 and later climbed to $32,000.
Many other lower cap assets, including the alternative Layer 1 coins Solana(-1.23%) and Terra(-1.03%) were hit.
In November 2021, U.S. inflation hit record levels. Bitcoin and Ethereum both rallied to all-time highs in response on the same day.
The difference this time around is that the 7.5% jump indicates that the Federal Reserve is likely to push ahead with significant interest rate hikes in 2022 as planned (when interest rates increase, risk-on assets tend to tumble as the cost of borrowing money jumps).
Bitcoin and Ethereum are respectively down 37.5% and 36.2% from their highs recorded in November.
ADA touches $1.20; can it regain previous losses?
Cardano saw a daily 13.91% increase yesterday. The Proof-of-Stake blockchain appears to be bullish. However, the uptrend seems to experience a limitation as there are possibilities of several obstructions in its way. Notwithstanding the buying pressure, Cardano (ADA) faces, any denial at both levels can cause the altcoin to trade as low as $1.
Thus, traders need to be cautious around the ADA coin and its forthcoming rally.
What next for XRP?
XRP has seen a 44.17% increase in the last 24 hours. The sixth-largest cryptocurrency by market capitalization has been riding really high recently. The cross-border remittance token surged by nearly 68% in the last two weeks after reaching a local bottom at $0.55. However, XRP appears to be gearing for a correction after incurring significant gains.
Given the significance of the bullish impulse, XRP could soon be bound for a brief retracement.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!