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How CPI Affects Crypto & Why

If you’re into crypto, you’ve probably noticed that big price swings often happen right after inflation reports drop. But why? It all comes down to the CPI (Consumer Price Index)—a key measure of inflation that tells us how much the cost of goods and services is rising.

Check your CPI

What Is CPI, and Why Does It Matter?

The CPI tracks the price changes of everyday things like food, rent, and gas. When the CPI is high, it means inflation is up. When it’s low, inflation is cooling down. The Federal Reserve (or other central banks) closely watch the CPI to decide whether they need to raise or lower interest rates to keep the economy stable.

The Fed, Inflation & Crypto

Crypto is considered a risk asset, meaning its price often reacts to economic policies.
Here’s how different CPI reports impact the market:

High CPI (rising inflation) →
The Fed might raise interest rates to slow inflation. This makes traditional investments (like bonds and savings accounts) more attractive, leading to a crypto sell-off as investors move to safer assets.

Low CPI (cooling inflation) →
If inflation is under control, the Fed can pause or even cut interest rates. Lower rates mean more liquidity in the market, which often leads to higher crypto prices as investors look for better returns.

CPI reports come out monthly, and each release can cause massive volatility in crypto markets. Speaking of monthly events… Our app stories keep you in the loop with all the key economic updates. Wanna stay ahead of the game? Download our app to never miss a beat!

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