Cryptocurrencies suffer from record inflation in the US

Stock market declines, cryptocurrency depreciation and rising dollar quotes - these are likely signs of investor fears about increasingly resolute actions by the Federal Reserve aimed at stifling inflation in the US.

The data released on Friday showed that the May price dynamics in the American economy reached 8,6%, i.e. the highest since December 1981.

The interest rate ceiling is already closer to 4 than 3 percent.

Federal Reserve it may react to this by raising the federal funds rate not by 50 basis points, as assumed by the market consensus, but by 75 basis points at one of the next two meetings.

The entire current cycle of increases may also end at a higher level. This morning the Fed rate futures seem to be valued at 3,5-3,75%. as the target level. Meanwhile, just a few weeks ago, the valuation assumed a peak around 3%.

As the investor's attractiveness of the dollar and US bonds grows ...

Expectations for the Fed seem to be driving the dollar. USD index, reflecting the strength of the US currency, rose to 104,5 points this morning, approaching the highest level in 20 years.

The yields on US treasury bonds, both 2-year and 10-year, are also going up. They start to exceed the levels of 3 percent. And the increasing appeal of safe asset rates can cause investors to turn away from the riskier ones.

... the demand for stocks and cryptocurrencies is falling

Capital seems to be draining away from the stocks and cryptocurrencies. Suffice it to mention that only over the last week the main American S&P 500 index fell by more than 6 percent. At the same time bitcoin depreciated 8,5 percent, and Ethereum, i.e. the second most popular cryptocurrency, approx. 10 percent.

Will the Fed really decide to intensify its activities? We will get to know some of the answers to this question on Wednesday, when the US central bank announces its decision on interest rates and presents its macroeconomic projections.