It should be noted that Bitcoin, along with the cryptocurrency market as a whole, has previously shown illogical moves in response to global developments. In particular, at the end of July, the US GDP data became known, with a 0.9 percent decline for the second quarter of 2022.

And since this is the second decline within a quarter, it meets the definition of a recession. However, the coin market was not confused by such news, so it took to rise.

Momentum announcing the rate hike on the Bitcoin chart at the end of July 2022

Read more about what’s happening in a separate piece. Although the rise has now proved more logical, its magnitude was still surprising.

What’s happening to Bitcoin’s exchange rate

As you can see from the chart below, BTC’s rebound was quite strong on a local scale: Bitcoin appreciated by almost a thousand dollars in just a couple of hours.

Hourly chart of Bitcoin exchange rate

As we already noted, yesterday the US Consumer Price Index (CPI), which shows inflation in the country’s economy, was released. The index was recorded at 8.5 per cent year-on-year, which is 0.2 per cent lower than predicted. That is, many expected higher inflation, but the news turned out to be more positive.


It should be noted that this is not always the case. In particular, the Consumer Price Index was published on July 13, which was 9.1 per cent year-on-year. The result was 0.3% higher than the forecasted 8.8%, which means that the reality was harsher than expected. However, as we have already noted, even in such conditions Bitcoin showed power and gave out growth.


Consumer price index for the last five years

Raul Paul, founder of Global Macro Investor, noted that the rise in markets could last at least a couple of weeks after the news of inflation. Here’s his rejoinder, cited by Cointelegraph.

Markets now have a clear path to growth before the US Federal Reserve’s regional survey results are released in a few weeks. Peak inflation leads to increased panic. I think markets will react positively to at least a slight decline in the indicator.


It should be noted that previously experts have repeatedly stated that the occasion for a new phase of cryptocurrency growth or even a new bullrun in the coin market will be a policy change by the Fed, which now regularly raises its key base rate. In June and July 2022, for example, Fed officials raised it by 75 basis points for the first time since 1994.

And when the indicator returns to zero, it will create a reason for investors to increase their appetite for risk, so cryptocurrencies will be in the spotlight again. By the way, lower inflation is the main prerequisite for a key rate cut.


Bitcoin’s rise has also been the cause for jokes. In particular, a well-known member of the blockchain community under the pseudonym Bitlord said that CPI – that is, the Consumer Price Index – actually stands for “Can Pump Immediately”. And market behaviour has indeed confirmed this mysterious theory.

Pump means growth in the cryptocurrency market

The US Federal Reserve’s surveys are another metric published by the body that displays the financial well-being of US households. If these results are worse than expected, crypto and traditional markets could indeed go down. For now, however, there are no short-term triggers for a fall.

Meanwhile, crypto is still being accumulated by certain categories of market participants. In particular, analysts at the Glassnode platform highlight several periods of accumulation on the global BTC chart, which can be seen in the screenshot below.

Phases of BTC accumulation

At the same time, it is the “shrimpers” – investors whose capital is less than 1 BTC – who most actively buy up coins at the moment. But the “whales”, i.e. big players with thousands of bitcoins in their accounts, are actively selling their BTCs.

Coin accumulation by “shrimpers”

This suggests that Bitcoin's current local rally has been triggered mainly by crypto holders with low balances, CryptoSlate reported. However, the biggest stages of growth in the coin market are usually precisely provided by newcomer investors, who get into positions later than others.

Buying cryptocurrencies by investors


We believe that such a sharp rise in the value of digital assets in response to the publication of inflation data generally shatters established perceptions of the coin industry and its bearish trends. Still, BTC is now about 40 percent above its local bottom at $17.6 thousand - an incredible result amid a downward trend and serious problems in the global economy and geopolitics. I want to believe that this is not just a fluke, but maybe a fair market assessment of the digital asset industry and its future prospects.


What do you think about it? Share your opinion in our millionaires’ cryptochat. There we will discuss other developments related to the blockchain and decentralisation industry.