Major cryptocurrencies experience steep drops within 24 hours after release of August CPI

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Wednesday, September 14, several cryptocurrencies experienced a steep and sudden plunge. On Tuesday, September 13, the August consumer price index was reported at an increase of 8.3% compared to last year, a much higher number than expected. The report dimmed investor hopes for more favorable prices and less aggressive action by the Federal Reserve.

This news impacted the crypto market significantly. In 24 hours, the market saw $250 million in future losses. Bitcoin comprises most of these losses at nearly $130 million. Before the CPI was released, the token was trading at over $22,500. One hour after the report came out, Bitcoin had dropped by 5%. As of September 14, it has plunged by 9% and is trading at $1,622. This is a slight recovery from the $1,560 it dropped to on Tuesday night.

Ether futures saw $125 million in losses, while Ethereum Classic (ETC) lost over $10 million. The ETC drop was a surprise due to recent interest in this currency due to its upcoming changes. Outside of the more well-known tokens, ATOM dropped 11%, APE lost 12%, and Luna Classic saw a staggering 14% loss.

Some experts suggest that crypto, especially Bitcoin, can no longer be viewed as an inflation hedge. An inflation hedge is defined as an investment intended to protect investors against a sudden decrease in the value of a currency and other assets. Traditional inflation hedges include stocks, real estate, and even precious metals.

Yet, according to one currency trader, even gold has not been able to balance out current inflation rates. Daniel Kostecki of the investment company Conotoxia explained why cryptocurrency could lose its appeal as an inflation hedge. He remarked that while the US dollar has increased more than 20% against the Japanese yen and 15% over the South Korean won, Bitcoin has lost 35% of its value since the beginning of 2022.

Cryptocurrency has seen whirlwind activity this year. Investors hoped for a comeback after the catastrophic crash between May and June that wiped out nearly $1 trillion in digital assets. But whether or not Bitcoin will ever trade at its all-time high of $68,000 remains to be seen.

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