Bitcoin Plunges After US Labor Dept. Announces 6.5% Inflation Rate

• The US Labor Department announced the inflation numbers (CPI) for December 2022, showing a year-over-year increase of 6.5% for the general CPI and a 5.7% rise in the core CPI.
• Bitcoin reacted with a sudden move that took it south by a few hundred dollars.
• Most experts had predicted an inflation increase of around 6%, which is precisely what the US government announced.

The US Labor Department recently announced the inflation numbers (CPI) for the last month of 2022, and the figures have clocked in at 6.5% YoY. This marks the highest December jump in over 40 years and is slightly above the predicted 6% increase that most experts had suggested. The core CPI (excluding food and energy) also saw a 5.7% rise.

In response to the announcement, Bitcoin reacted with a sudden move that caused it to take a dive of a few hundred dollars. This is likely a result of the concern that inflation numbers could have an impact on the cryptocurrency, as high inflation rate can be seen as a devaluation of the currency.

The high inflation rate could also be a result of the massive stimulus package that was passed by the US government earlier this year. The package, which was worth $2.3 trillion, was aimed at providing relief to those affected by the pandemic. This led to an increase in demand, which in turn caused prices to rise.

The US Federal Reserve has been trying to contain the inflation rate by increasing interest rates and other measures. However, the recent inflation numbers show that the Fed’s efforts may not be having the desired effect. This could lead to further action from the government in order to contain the inflation rate.

In any case, the increased inflation numbers have had a direct effect on Bitcoin, showing the cryptocurrency’s volatility. The sudden drop in value is a reminder of the risks that come with investing in cryptocurrency. Investors should be aware of the potential for sudden changes in the market and act accordingly.

It remains to be seen how the US government and Federal Reserve will respond to the recent inflation numbers, and how this will affect Bitcoin in the future. Nevertheless, the sudden dip in value is a reminder of the volatility of the cryptocurrency market and the need for investors to be aware of the risks associated with investing in digital assets.