📊 CPI Report and Crypto Currencies
💠 What is the CPI Report?
The CPI Report is a monthly report that indicates how much the prices of goods (food, clothing, rent, transport, fuel, etc.) have increased or decreased compared to the previous month or year.
This is essentially a monthly account of inflation.
💡 Example:
If the CPI Report shows that inflation is 6% this month and was 4% last month, it means the rate of increase in prices has accelerated.
💠 What is the Role of the CPI Report?
The government and State Bank use this report to decide whether to give less or more interest (interest rate) to depositors.
This report indicates whether inflation is under control or not.
It is the most important signal of the economy's direction.
💠 CPI Report and Crypto Currencies:
Now let's understand how the CPI Report affects crypto:
🔺 When Inflation is High (High CPI):
The government raises interest rates to control inflation.
People withdraw money from risky places (like crypto) and deposit it in banks because there is less risk and more interest there.
Result: The price of crypto falls.
🔻 When Inflation is Low (Low CPI):
The government reduces interest rates to inject money into the economy.
People withdraw money from banks and reinvest it in crypto and risky assets to earn more profit.
Result: The price of crypto increases.
❓ Which Country's CPI Report Affects Crypto?
The USA's CPI Report is the most important because the USA is the world's economic superpower.
👉 This is why the USA's inflation report directly impacts the prices of cryptocurrencies.
💎 Summary
If inflation increases in the USA → Crypto falls 🚨
If inflation is low in the USA → Crypto rises 🚀
