The inflation rate in the United States continues to develop positively. After rising to 9.1 percent in June 2022, the highest value in 40 years, it was only 7.1 percent in November 2022. That’s according to the numbers released today.
US inflation has fallen for the fifth straight month, hitting the lowest level since December 2021 when it was 7 percent. The numbers are better than analysts expected. The forecast for November announced an inflation rate of 7.6 percent. The actual numbers are half a percentage point better, which is very significant.
US Federal Reserve rate hike taking effect
The drop in inflation shows that the US Federal Reserve’s tough interest rate cuts are having a growing impact. This year, the Fed raised interest rates by 0.75 basis points in several steps, so that the base rate in the United States has now reached a level of 3.75 to 4 basis points.
So the Fed ended the zero interest rate policy that the US wanted to mitigate the effects on the economy, such as production stops, plant closures and reduced consumption, even during the corona pandemic.
Stock and crypto markets react with price increases
The financial markets reacted positively to today’s inflation figures. At the time of publication, the S&P 500 stock index, which lists the 500 most valuable listed companies in the US, was up about 1.5 percent.
The crypto market reacted even more to inflationary figures. Shortly after the figures were announced, the price of Bitcoin was just under $18,000. This corresponds to a gain of about 4 percent within a short period of time.
BTC/USD also reached its highest level since the fall of crypto exchange FTX in early November, when Bitcoin broke through key support zones and slipped to a yearly low of around $15,500.
Altcoin prices rise after Bitcoin
Several altcoins are also showing a strong trend at the moment so they can record price increases after Bitcoin. SOL, DOGE, BCH and AVAX, among others, increased by about 4 percent, corresponding to a similar increase in BTC.
But how much is this little pump worth today? Is this a real reversal that ends a bear market? Has Bitcoin Price Finally Seen Its Bottom Before The Next Bull Market Begins? Or is it just a flash in the pan before the next correction follows?
BREAKING: 🇺🇸 US inflation falls to 7.1%, lower than expected.
— Watcher.Guru (@WatcherGuru) December 13, 2022
News effect or true trend reversal?
This news-driven price rise should not be overemphasized at first. Because the past shows that there is a regular strong swing in the course of the inflation figures this year. Most of the time, this movement went south because the markets took the data rather negatively and caused investments like stocks to be bought or cryptocurrencies to be sold.
However, such news events are rarely sustainable especially for the markets. Although there is often a strong rash as a direct consequence, prices settle back to the original level in the following days. Is it different this time?
Bitcoin is in a small rally
Technical chart analysis can provide clues as to where the crypto market may be headed in the short term and what resistance and support zones are relevant for traders. The course of Bitcoin as a major currency serves as a good indicator of what can be expected for the overall market. Because the correlation between BTC and altcoin prices is still high.
Looking at the daily chart, BTC/USD is continuously making higher bottoms from the November 21st low, creating an uptrend. However, with today’s pump, Bitcoin price managed to break through an important resistance zone at around $17,700.
This resistance was initially a key support for the price of bitcoin, marking the lows seen in the summer of this year before breaking down on the crypto exchange FTX news on November 9, 2022.
Key Chart Pattern: Resistance at $20,000
BTC/USD is back inside the descending triangle pattern. A return to this post-technical bearish pattern, where a downward correction is more likely, is a good sign, but should not be overestimated.
If Bitcoin fails to test the important resistance area just below $20,000 and declare it as support again in the next step that will increase the chances of a continued uptrend. However, for that to happen, bitcoin would still have to make a big increase of around $2,000 within the formation.
Wednesday’s interest rate decision: is the next Bitcoin pump coming?
A key factor here could be tomorrow’s meeting of the US Federal Reserve. Here, the monetary watchers are looking to announce another rate hike for the last time this year.
It is eagerly awaited whether the Fed will accept the new inflation figures as an opportunity to end the year’s tight interest rate policy. In the forecast, analysts assume that interest rates will rise by only 0.5 basis points this time, after 0.75 basis points in previous interest rate decisions.
However, markets may have already priced in a 0.5 basis point hike, so there may not be a huge market reaction. It would be more encouraging for the course if the Fed does not meet the forecast. If, contrary to expectations, interest rates rise again by 0.75 basis points, a correction will certainly be expected. However, if the decision is better than expected and the Fed raises rates by just 0.25 basis points or no hike at all, markets could be sustained.
The consolidation could continue in February
The central bank is definitely in a quandary here. On the one hand, he is still far from his goal of pushing inflation down to 2 percent, on the other hand, he does not want to paralyze the financial markets with an overly aggressive interest rate policy.
Even after tomorrow’s interest rate decision, further consolidation of the aforementioned chart pattern is possible. In theory, the price can remain in the formation until mid-February 2023 before a directional decision has to be made.
IMPT alternative tokens before the start of trading on crypto exchanges
If you are looking for an exciting investment in the crypto market in addition to Bitcoin, which could bring high returns in the next few years, you should take a closer look at the IMPT project. For purchasing IMPT tokens, users receive emission credits and can therefore contribute to climate protection. There are also unique artist NFTs.
After the successful pre-sale, the IMPT token will soon be listed on the first trading exchanges. After pre-sale prices of $0.018 and $0.023 in phases 1 and 2, investors are expecting a strong price increase at the beginning of the market.