Crypto market maintains strong footing as US inflation rises another 0.5% in July

Key Takeaways:

  • Inflation in the U.S remained elevated in July, however monthly price pressure weakened.
  • Cryptocurrency market remained strong, as the total market cap neared $2 trillion.

NEW DELHI (CoinChapter.com) — The cryptocurrency market remained bullish, even as inflation in the U.S rose by 5.4% on the year in July. As the economy recovered, the Consumer Price Index (CPI) increased 0.5% in July on a seasonally adjusted basis. Although a welcome relief from the 0.9% rise in June, the increase is still above the average 0.2% rate between 2000-2019.

The crypto market remained bullish as it continued its upward rally that began on July 21 after the B-word conference. From August 4’s low of $1.508 trillion to August 8’s high of $1.934 trillion, the crypto market cap gained 28.18%. Additionally, the crypto market registered seven green candles in the last eight days.

Cryptocurrencies On The Rise

Bitcoin, the flagship cryptocurrency, holds approximately 44% of the total crypto market cap. As such, Bitcoin movements have a major impact on the crypto market trends. Following the CPI report, Bitcoin surged past the $46,000 resistance. Moreover, altcoins joined Bitcoin to post massive gains over the past week.

The Crypto market bullish price rally began on July 21. Source: CRYPTOCAP on Tradingview.com
The Crypto market bullish price rally began on July 21. Source: CRYPTOCAP on Tradingview.com

On August 7, the total market cap breached above $1.78 trillion for the first time since May 26. In addition, the 50-Day (Yellow) and 200-Day (Green) Moving Average trendlines are below the crypto market cap, highlighting the bullish sentiment the market is enjoying.

Also Read: U.S mutual fund giant launches Bitcoin fund.

The next resistance for the market lies at $2 trillion. If the crypto market breaches above it, the next target is at $2.12 Trillion. On the other hand, if the market pulls back, it will find support at $1.773T, while a further decline will see the support at $1.631 come into play.

Crypto, Crypto market maintains strong footing as US inflation rises another 0.5% in July
Momentum oscillators for the crypto market on the daily chart. Source: CRYPTOCAP on Tradingview.com

Meanwhile, MACD is bullish for the crypto market as well. The momentum oscillators histogram, which plots the distance between MACD line (difference of 12-Day and 26-Day EMA) and MACD signal line (9-Day EMA of MACD), is charting positive bars for some time now. In detail, increasing positive bars on the histogram indicate a strong bullish momentum.

One worrying aspect is the value of the relative strength index for the crypto market. The RSI is in the overbought region with a value of 76.38. However, the RSI trendline is moving upwards as well.

U.S Inflation Worries Investors

A decline in the inflation rates would have considerably strengthened the U.S Dollar. The annual gain is more than the 5.3% predicted by economists. As the monthly rise declined from June’s 0.9% to 0.5%, it calmed some of the fears of monetary policy tightening. Nine of the 11 major S&P sectors rose during early trading, with the biggest gainers being utilities, materials, and industrials.

Also Read: Coinbase stock hits three-month high following 1,000% yearly earnings boost.

The swift economic recovery has caused supply-demand mismatches in a few key sectors. Businesses are trying to overcome supply chain hurdles created by Covid-19 as they rebuild their inventory. Moreover, low-interest rates and roughly $6 trillion in relief packages bolstered demand, increasing price pressure and leaving investors worried about the dollar.

The Federal Reserve monitors inflation rates, and the central bank continues to view current inflationary trends as temporary. However, the personal consumption expenditures price index, used by the Federal Reserve to measure inflation, jumped 3.5% in June, which is its largest since December 1991.

On the other hand, strong fundamentals support the current crypto bull run, such as new projects and partnerships, Ethereum’s latest update, Bitcoin’s rally after the U.S Inflation report, the booming blockchain gaming industry, etc.

In addition, statements from crypto supporters like Tesla CEO Elon Musk stating he owns cryptos other than Bitcoin (during the B-Word conference), Senator Cynthia Lummis’s argument favoring Bitcoin as a diversified asset option also provide tailwinds to the crypto market uptrend.

Thus, it seems that cryptocurrencies have plenty of fundamentals in their favor. Also, investors may take to crypto as a hedge against inflation.

At the time of writing, the crypto market cap was at $1.92 trillion, up 4.35% on the day.

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