A leading crypto analysis firm claims that there is a correlation between cryptocurrency prices and inflation levels.
Santiment says the crypto market has seen an uptick after the Consumer Price Index (CPI) was announced to rise 8.5% in March. told.
“When inflation and CPI data are the main topics of interest for the crypto community, price reversals often occur. We saw a nice crypto bounce today, with consumer price data showing a higher-than-expected increase of 8.5% in March.”
The analytics firm said that Bitcoin price tends to reverse when the frequency of the keywords “inflation” and “CPI” appear on social media platforms.
“If we look at the terms ‘inflation’ and ‘CPI’, we can see that when these issues rise, the market turns its head.”
As an example, Santiment says a crypto bottom occurred in mid-March after the Federal Open Market Committee stated that inflation remained “high.” We’ll see if the surge from the CPI, which rose 8.5% in March, will mark another bottom for Bitcoin, according to the analytics firm.
The analyst firm also adds that the increase in the frequency of the keywords “inflation” and “CPI” appearing on social media platforms does not guarantee returns.
“Super high social volumes are often the harbinger of a price change. Remember: these spikes do not always mean that there is a definite peak or bottom formation. But that means that every time the crypto crowd rationalizes an event, it’s as if they were a group saying, ‘Okay, now we know why. And then, usually after the consensus of this crowd, the opposite price reaction emerges.”
You can check the price movements here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.