Biden’s administration warns of the increasing inflation shaking up the crypto market on a global scale. The traders face a bear market, causing chaos in the crypto community. Will the U.S government be able to recover from the high cost of inflation?
According to the White House, the increasing inflation rates are due to the ongoing Ukraine-Russia war. America’s cost of living has spiked drastically. Jen Psaki, press secretary of the White House says, “We expect March [CPI] headline inflation to be extraordinarily elevated due to Putin’s price hike.”
According to the reports, CPI has increased since March and continues to rise to 8% and above, making it hard for a common person to afford basic necessities.
Core inflation, which was 6.4% in February is predicted to have risen 6.6% year on year.
This 8% inflation increase brought down Bitcoin’s price to below $40,000, and it is still floating within the level since then, which is quite worrying for the traders.
Biden’s administration is trying to recover from the damage control. The trading industry is especially stressed seeing the high lows in the crypto market globally.
Every global crisis has a direct impact on the crypto market. Since the beginning of the Ukraine-Russia war, the crypto market has also fallen drastically. The fluctuating prices are due to the increasing inflation rates, especially the gas prices.
The gas prices rose by 18.3% and energy increased by 32% over the last year. The administration claims that the gas prices increased due to the war which is directly impacting inflation and the crypto market.
Psaki details: “At times, gas prices were more than $1 above pre-invasion levels, so that roughly 25% increase in gas prices will drive [Tuesday’s] inflation reading.”
Right now, the U.S government’s main priority is to bring back the CPI to a normal percentage. Federal Reserve Governor Lael Brainard released a statement about “bringing inflation down is of paramount importance.”
Once the interest rates increase and the market sees a rapid balance sheet rise, the country is expected to return back to normal.
Based on the American Automobile Association reports, the gas prices have lowered by 23% compared to March.
Agustín Carstens, general manager of the Bank for International Settlements, says, “It seems clear that policy rates need to rise to levels that are more appropriate for the higher inflation environment.” Carstens expresses the need for interest rates to rise to bring the market to a “moderate demand.”
As the crypto traders struggle to keep up with the bear market, they also hope that the government is able to recover from the 8%+ inflation rate soon.