Bitcoin Rallies As U.S. Inflation Hits 7%

Traders focused on the headline inflation number and rushed to buy riskier assets, including cryptocurrencies. Ethereum, Binance Coin, Solana, Cardano, XRP, Terra are all moving higher as traders look ready to buy all leading coins.

While the inflation number itself is scary, traders feared that Inflation Rate will exceed analyst expectations, and the Fed will be forced to act aggressively by raising the interest rate on each meating in 2022. In addition, the Fed has the option to reduce the size of its balance sheet, pushing Treasury yields higher, which will be bearish for all riskier assets, including cryptocurrencies.

It is important to note that the market is not treating any cryptocurrency as an inflation hedge. Instead, Bitcoin and other cryptocurrencies are viewed as risky assets, which benefit from lower rates and struggle when the Fed tightens its policy.

As inflation met analyst estimates, traders bet that Fed will not make additional moves to tighten its policy, and buy riskier assets like cryptocurrencies.
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