Crypto prices were on a downward spiral in the early hours of July 14, fueling speculations that banks in the UK and US might be forced to increase interest rates to hedge against inflation. Inflation in both countries is preparing to hit the roofs. The fallout of the latest development is a decline in the crypto market.
Flagship cryptocurrency, Bitcoin plunged to a low of $31,550 indicating a 4.1% decline from its previous price of almost $33k. It had touched what seems like an all-time high now in mid-June; traded briefly at $41,300 before plunging to the depths again. Right, Bitcoin is trading far below its April all-time high of $64,000.
Second largest cryptocurrency by market capitalization traded briefly at a low of $1,883 trading below before moving back to the $2k range again. In its own stead, meme-based token Dogecoin traded at $0.19 within the same period, plunging by 6.6% from $0.23 it recorded over the past week. However, it’s still ridiculously below its $0.71 peak back in April.
Inflation in UK and US at All-time High
Apart from the expected corrections, the crypto market is the victim of a roughshod ride resulting from the soaring pressure it is facing from regulatory bodies across the globe. Another trigger is the inflation in the US and the UK, which according to reports is responsible for the selling pressure. Available data revealed that inflation in the US leaped to a 13-year high in June. Same data attributed the inflation to a spike in the prices of second grade cars, leading to an increase of 5.4% in end-user prices for the past years.
In a similar development, the United Kingdom faced an inflation rate of 2.5% in June, which is the highest figure ever recorded since 3 years ago. The present figure contradicts the predictions made by stakeholders in the UK economy. Reports say the easing of lockdown is partly responsible for the inflation in some economies around the world.
Experts Predict Worse Inflation Rates
Even as countries like the US try to issue handouts to citizens via COVID relief packages by printing more money, the inflation situation worsens. Inflation in the UK has exceeded the 2% limit predicted by its apex bank. The BoE’s chief economist stressed that a 4% inflation rate was looming by the end of the year. Apex banks in the UK and UK might be forced to raise the limits on interest rates to hedge against the resilient inflation.
Hostile crypto regulations are still spreading vastly across the globe. UK and US regulators have been leading the mission to impose regulations on cryptocurrencies. Crypto exchanges are now at their mercy. While the regulatory pressure mounts, crypto investors and miners have also been accumulating digital assets in preparation for the summer/bull season. The current state of the market presents them with the opportunity to buy crypto assets at a discount.
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