The Consumer Price Index raced to 7.5% in January, accelerating at their fastest pace since 1982.
Bitcoin notched up its eighth consecutive day of gains on Thursday — buoyed by the release of dire inflation figures in the U.S.
The Consumer Price Index raced to 7.5% in January, accelerating at their fastest pace since 1982. Estimates suggest the surge is costing the typical American household $250 a month.
Bitcoin is seen as a desirable asset given how inflation erodes the spending power of dollars. The world's biggest cryptocurrency has a maximum supply of 21 million.
But runaway inflation also adds urgency to the Federal Reserve's plans to increase interest rates next month — a move that could hurt stocks and cryptocurrencies in tandem.
BTC managed to break through $45,000 for the first time in over a month on Thursday — capping off a seven-day increase of 23% as the crypto markets continue to recover from a torrid January.
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What's Next
In other developments, research from Blockforce Capital suggests that many existing BTC investors may be reluctant to make further purchases right now.
Over the past five months, the average investor has made purchases when Bitcoin was trading at $47,000 — and all of this means that many of them are still underwater.
Blockforce analysts believe consumers may only be tempted to start building on their positions once they have broken even — marking a full recovery after a dramatic slump to lows of $33,000 last month.
There is also a risk that $47,000 "could provide resistance as those recent buyers may look to recoup their investment and sell off."
Analyst Brett Munster has set an upbeat tone for the digital asset, writing:
"While it's still too early to declare with any certainty that $33k was the bottom, there is reason to believe that there is now much more asymmetry to the upside than downside. That doesn't mean Bitcoin couldn't fall back down again, but the data seems to suggest that the upside potential now outweighs the downside."
