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8.6 per cent US Inflation Rate exceeds expectations

High inflation rates and the spectre of higher interest rates are a drag on asset prices. Centralized entities appear to be facing liquidity challenges.

On Friday evening (Australian time), the US Bureau of Labor Statistics released the latest inflation data. This showed an inflation rate of 8.6% which exceeded the expectation of 8.3%.


source: tradingeconomics.com

The elevated inflation rate in the US was mirrored by discouraging data released locally. For example, new home sales in Australia declined by 5.5% in May, which was greater than the prior month which had a 1.2% decline. The ASX200, an index representing the largest publicly listed companies in Australia, declined by 9% this month. Over the same period, the exchange rate for bitcoin declined by 25% and, at its current price (approx $34k AUD), it is just above the 200-day moving average. Chart courtesy of Bitbo.

Price volatility has wreaked havoc for centralized entities. Hot on the heels of the UST/LUNA debacle (explained here) in which “shitcoin” speculators lost fortunes when the assets became worthless, Celsius has suspended trading and withdrawal for its customers.

Celsius is a centralized exchange that offers to pay market-leading interest on assets deposited with them. The potential for disaster in the crypto space has been highlighted by many bitcoin-only commentators, most vociferously by Cory Klippsten of Swan Bitcoin, a US-based bitcoin-only exchange.

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