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Will the crypto suffer more as inflation rate in the eurozone reaches ATH?

01 Sep 2022 By: Shailja Joshi
Will the crypto suff

A number of financial difficulties are being faced by the Euro-zone as the repercussions of the Russian war worsen.

The Euro is underperforming as the global financial landscape collapses. The inflation rate in the 19 nations that use the Euro reportedly spiked to 9.1% in August, marking the highest recorded statistics in the currency's history, according to the most recent reports.

According to data, the Eurozone's highest CPI rate for energy was 38.3%.

The consumer price index (CPI) numbers were released by Eurostat, the European Union's statistical office, on Wednesday. August's inflation rate was 9.1%, up from July's 8.87% rate. Energy costs significantly contributed to the unfavourable growth, according to statistics from the Eurostat report. As a result of Russian sanctions, the market for power has been severely impacted, and the Eurozone has been struggling with rising energy costs.

Despite the fact that the rate for electricity was the highest, at 38.3%, it was lower than the rate of 39.6% in July. The 9.1% CPI figure represents the Eurozone's ninth straight increase in inflation rate. One month after Russia invaded Ukraine, the biggest single rise occurred in March. The CPI rate increased to a startling 7.44% in March from a rate of 5.87% in February. Since then, the growth has continued.

The interest rate was raised by the European Central Bank by 50 basis points in July. The action was taken in an effort to stop what seemed to be an endless rate rising in inflation. The Euro zone will anticipate another aggressive interest rate hike on September 8 after the rate in August was higher than anticipated, coming in at 9.1% instead of 9%. It is unclear how this may impact stock and cryptocurrency markets as well as other general financial markets.

Recently, the stock and cryptocurrency markets have been battling to survive.

The state of the international financial markets, in addition to the Russian war, has contributed to the high inflation rate. On August 23, the EUR traded at a 20-year low of $0.9910 against the USD. The stock and cryptocurrency markets have also recently struggled for survival.

Jerome Powell, the chair of the Federal Reserve, made some unlucky remarks on August 26 that did little to improve the situation. Threats of additional interest rate increases caused the stock and cryptocurrency markets to crash even more. The crypto markets especially bled into the weekend, reaching lowest points in August.

Despite this, the markets are now making a good effort, with little increases seen on Tuesday. At the time of writing, the original cryptocurrency, Bitcoin (BTC), is trading for $20,324. Despite being one of the asset's lowest points in August, this value has successfully risen beyond the $20k support level. In the last 24 hours, Ethereum (ETH) has increased by 0.54%, trading at $1,594.