Bitcoin and stocks rise after the announcement of the highest inflation in 40 years in the US.

Key facts:
  • Since 1982 there has not been such a rapid increase in annual inflation in the United States.

  • The price of bitcoin recovered 2.2% in the last 24 hours.

The year 2021 became the most inflationary of the last four decades in the US, as can be seen from the Consumer Price Index (CPI) published this Wednesday, January 12. According to figures from the US Department of Labor, inflation in that country was 7% in the last 12 months.

The US has not seen such a rapid rise in prices since 1982 (39 years ago). The indicator known as CPI is a metric that reflects the behavior of the prices of a representative group of products and services in the economy.

Annualized inflation in the US reached 7% for the first time in 39 years. Source: CNBC

According to the information, housing, used vehicles and energy were the most expensive goods in the main world economy. This year’s inflation figures come after months of a highly expansive policy, which has allowed more inorganic money to be issued than ever before in US history.

Despite the results, the price of bitcoin (BTC) reacted positively and broke a rachas bearish that started on January 2. The increase in the price of bitcoin at the time of writing is close to 2% in the last 24 hours, with a price that is around USD 43,000.

Some reports show losses of USD 82 million in 24 hours by traders who bet lower in the bitcoin futures market.

Picture 2

The price of bitcoin is currently hovering around $ 43,000. Source: CoinMarketCap

Correlated Bitcoin: stocks are also in the green

The upward movement was also evidenced in the equity markets, with which bitcoin maintains a close correlation, as reported by CriptoNoticias.

The markets opened in green this Wednesday, after the statements of the president of the US central bank, Jerome Powell, in a hearing before the Senate on Tuesday, January 11. The official confirmed that the plan to control inflation and stabilize the economy without generating trauma would be maintained, which seems to have brought reassurance to investors.

Some media claim that inflation figures remained within what economists expected. A Bloomberg report from earlier this week estimated that year-on-year inflation would stand at 7.1%.

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Consequently, the markets would be interpreting that the Federal Reserve (FED) will not accelerate the increase in interest rates, which currently remain close to 0%. However, the decision on these adjustments will be announced after the first meeting of the US monetary authority, which will be held on January 26.

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