In December, monthly inflation in the USA increased slightly above expectations and reached 0.5%, while annual inflation rose to 7% in line with expectations.

The consumer price index (CPI), an important measure of consumer prices published by the US Department of Labor, was expected to show inflation rising 0.4% in December and 7% year-on-year.

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Bitcoin (BTC) soared after inflation figures in the US, climbing from $43,400 to $43,900 within minutes, bringing its daily gains to about 5%. Ethereum (ETH) also rose to over $3,375, pushing its daily gains to 8%.

Grant Thornton's Chief Economist Diane Swonk spoke to CNBC about the latest situation.

   "You've put the Fed in a panic instead of a patient mode, so the risk is over the top... We are now in a position where the Fed is acting instead of waiting. It's worrying."

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Marcus Sotiriou, an analyst at UK-based digital asset broker GlobalBlock, said in an email before the inflation figures were released that this would not last long as the market is already pricing in the worst-case scenario due to recent sales.

Sotiriou said that on-chain data is generally positive, indicating that current prices are a buying opportunity.

   “Bitcoin has entered buying territory only 5 times in its history, according to the dormant flow that has sparked and all led to incredible rallies. This indicator compares Bitcoin's market value to its annual destruction value, i.e., price versus spending behavior. The percentage of people spending their Bitcoins is very low. This shows the sentiment of investors who do not want to sell their Bitcoin at this price.”

Fed Chairman Jerome Powell said in his speech to the Senate Banking Committee yesterday that he will likely stay in the low interest period.

Mati Greenspan, founder and CEO of Quantum Economics, claimed that if given another term, Powell would remain the key figure in printing money.

Markets have been down a lot lately, so there's more than enough for an upside correction, Greenspan said.

Meanwhile, inflation in China came in below expectations. China's annual inflation rate fell to 1.5% in December 2021, from 2.3% a month ago, a 15-month high. The final figure was less than the market expectation of 1.8%, according to data from Trading Economics. Reuters noted that the slower-than-expected December producer inflation in China paved the way for further monetary easing.