Crypto winter resumes as UK inflation hits 40-year high
In recent days, the UK economy has had a detrimental effect on the crypto market. The crypto market lost momentum on Wednesday as US stock futures rose ahead of major firms’ quarterly results. The British pound fell after the release of a report indicating that inflation in the UK in September rose faster than economists had expected and hit a 40-year high.
Since the start of 2022, every component of the digital asset ecosystem has suffered losses. In particular, the metaverse is on the brink of extinction. Several crypto-coins have completely disappeared from the market.
UK inflation hits 40-year high
Inflation in the UK returned to double digits last month on the back of the biggest rise in food costs since 1980. In a severe blow to households struggling with a cost of living crisis, July figures hit a 40-year high.
In the 12 months to September, the consumer price index rose 10.1%, according to the Office for National Statistics, compared with 9.9% in August. Most economists had predicted a CPI of 10%. Therefore, the outcome was largely in line with the forecasts.
As a result of the news, the pound fell below $1.13 and was last down 0.2% on the day. In light of Wednesday’s figures, the Bank of England is feeling pressure to accelerate its interest rate hike next month.
The data highlighted the challenging environment for UK households. However, the impact was most severe for the lowest-income individuals, who confront additional uncertainty regarding the extent of financial assistance available to them in light of recent government conflicts.
Even without the recent political and economic turbulence, the UK was severely affected by the rise in European natural gas prices as a result of Russia’s invasion of Ukraine. Negative economic sentiment has exacerbated post-COVID supply chain bottlenecks and labor shortages, resulting in severe compression of living standards.
After the data was released on Wednesday, the Prime Minister indicated in the House of Commons that state pensions would increase in line with inflation. However, the Prime Minister did not make a similar promise about benefits to non-pensioners. Inflation rates have had a suffocating and unwanted effect on the crypto markets.
Crypto markets are taking in big losses
As previously mentioned, the UK economy has had a rather chilling effect on the crypto market. Bitcoin (BTC) prices fell 2% on Wednesday. The current Bitcoin price, as reported by CoinMarketCap, is $19,188.82. The 24-hour trading volume for Bitcoin stands at $27,103,043,666. The coin’s value has decreased by 1.35 percent in the last twenty-four hours.
Ether (ETH), the second largest cryptocurrency by market capitalization, was also down about 1.6% on the day. Altcoins Aaves AAVE and Uniswaps UNI increased by approx. 5%, but the market fell. According to CoinMarketCap, the current price of Ether is $1,302.
Following its deployment on the mainnet on Monday, the value of Aptos’ cryptocurrency plummeted. According to CoinGecko data, the long-awaited Tier 1 coin was listed in the $9 range and is trading 40% lower on the day.
Bitcoin was rumored to bounce back during October’s positive seasonality. However, the recovery has yet to materialize as savvy investors continue to store funds in US dollars (USD).
In addition, America’s relative economic strength and energy sufficiency may continue to boost demand for the dollar long after the Fed stops raising interest rates. According to seasonal patterns, the first quarter is often favorable for the dollar. How does this affect the cryptocurrency market?
Despite the bear market losing momentum in the last month of 2018, bulls remained on the sidelines for the first three months of 2019 – a seasonally positive time for the dollar. It remains to be seen how the bear market in 2022 will turn out.
Crypto set to shake up England’s ancient property laws
More crypto-related news comes from the UK. Global financial regulators seek to increase oversight of digital asset marketplaces. After a turbulent year for pricing and markets for digital assets, the drive for regulation is particularly evident. Although governments can instruct crypto firms and investors on how to behave, they do not create laws that can inform their policies.
To remedy this shortcoming, the UK government has commissioned an independent commission made up of High Court judges, lawyers and legal experts to investigate the crypto sector and recommend methods to regulate it.
The Law Commission for England and Wales, with funding from the UK Ministry of Justice, is doing various cryptocentric projects. These organizations are tasked with determining the optimal treatment of Web3 advances and digital assets under new and existing legislation.
The Law Commission’s projects may be not only important, but also urgent, given that the UK government is committed – for now at least – to transforming the country into a global center for crypto. The modification could be a turning point for digital assets.
