It may well be that yesterday we saw the beginning of the most important battle for trust in the financial system. The acceleration of price growth in the US to 6.2% YoY after short fluctuations can be regarded as a loss of control of the Federal Reserve over inflation. Apparently, such assessments of the situation prevail among speculators and small market players.
As a result, we saw a powerful rally in cryptocurrencies and precious metals, which gained more than 2% after the publication of the data. Bitcoin has set a new historical high at $69K. The purchase of assets that are not subject to inflation was the first reaction of investors to the data on prices in the United States. This alignment of forces has put the States on a par with emerging markets, from which investors are fleeing on signs that the regulator is not coping with the task of curbing prices.
If such a reaction turned into a steady trend, it would have far-reaching consequences.
However, at the close of the US session, the debt market began to lay down more decisive and speedy Fed rate hikes, which caused a powerful influx of capital into the dollar and triggered an initial reaction. De facto, this is bad news for bitcoin. At least not yet.
At the close of trading in America, BTC/USD was pushed back to the area of $64.5K, 6.5% below the peak, and continues to consolidate in this narrow range. The fall of the main altcoins was proportionate, but taking into account the initial surge, the losses per day are not so great: 3% for BTC, 1.5% for ETH and 2.2% for the total capitalization of cryptocurrencies.
Perhaps in the coming days we will have to find out which side will be right. At the end of the day on Wednesday, the victory should still be given to traditional finance. The sale in cryptocurrencies and the dollar’s highs for more than a year indicate the belief of the “big pockets” that the Fed has enough gunpowder to fight inflation, and it will be used.