numbers and truth – Did the US Federal Reserve’s reaction to inflation come late? The chief economist at RBC Capital Markets, Tom Porcelli, the think “The Fed is now late”. Most central banks have distinguished themselves in 2021, by a gap between their reassuring speeches on inflation and the reality economy and financial markets. Could 2022 finally smile on a Bitcoin (BTC) that started the year in the red?
FED and inflation in the United States: these records that bitcoin delights in
The United States Bureau of Labor Statistics released data on January 12, 2022 showing the Consumer Price Index (CPI) reaching record highs in the country. The CPI for December 2021 has indeed reached 7% YoY, registering an increase of 6.8% compared to the figure for the previous month. The Chinese journalist known on Twitter as Wu Blockchain pointed out that this is the “ highest level since June 1982 “.
Core CPI reached 5.5% in December 2021, the level highest since February 1991. This rate is up 4.9% compared to November 2021. The core CPI subtracts from the Consumer Price Index, the price of energy, food, and other elements considered as volatile and could give a false impression of inflationary pressure. The figures are however telling, and show the reality of galloping inflation.
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Consumer Price Rise: A Short-Lived Joy for Bitcoin?
The FED wants to control inflation by reducing its support for the economy, through a reduction in its asset purchases and by planning to raise interest rates in 2022. The institution’s chairman, Jerome Powell, has moreover confirmed this desire of the central bank to go in this direction the day before the publication of these data on the CPI, stressing that this high inflation represented a ” a serious threat for the recovery of the labor market in the United States.
These figures, a source of concern for the FED and the Biden administration, play in favor of safe havens like Bitcoin. The latter was also able resume the $44,000 on the day of the CPI data release, so that he had recently lost the $40,000.
These occasional rises in Bitcoin, against the backdrop of an unfavorable announcement for the US dollar, should not, however, rule out the structural threat to bitcoin : if the Fed actually manages to regain control of inflation in 2022, via the more rapid tightening of its monetary policy, some commentators are promising tougher times for BTC.
These billionaires who therefore advise to allocate part of their portfolio to Bitcoin would they still be right in 2022? The year has only just begun, and nothing is decided yet, either for the bears or for the bulls.
Who’s Afraid of Inflation? No one, until it devalues the value of your fiat currency holdings. If you want to easily buy bitcoins as a hedge asset or invest in other altcoins, register on the KuCoin platform and start trading your BTC or other cryptos there today! (affiliate link)