Bitcoin Price Rises. The highly anticipated U.S. Consumer Price Index (CPI) statistics released today revealed that, contrary to market expectations, U.S. inflation in May stayed steady at 0.3%. Notably, market observers were anxiously awaiting this important inflation data to get clues about the state of the American economy and the future direction the Fed may take regarding policy rate plans. Thus, let’s examine the most recent U.S. CPI inflation data in detail and consider potential implications for the price of Bitcoin and the cryptocurrency industry as a whole.
U.S. CPI Inflation Cools Sparking Market Optimism
The U.S. Bureau of Labour Statistics has released new data showing that the country’s CPI remained steady at 0.3% in May. However, the market expected inflation to decline to 0.1% for the month. Despite the spike, the annual CPI inflation rate decreased to 3.3% in May from 3.4% in April.
In the meantime, the Core CPI data—which does not include energy and food prices—cools off from 0.3% to 0.2% in April to May. Concurrently, the annual Core CPI number indicated that the inflation rate had decreased from 3.6% in April to 3.4%. Notably, both statistics indicate a decline in inflation, which has encouraged market optimism.
Bitcoin Price Rises: Since last week’s robust U.S. job data affected investors’ willingness to take on more risk, the cooling inflation data seems to have improved the market mood. Now that the U.S. CPI inflation numbers are easing, the cryptocurrency market will closely monitor the FOMC interest rate decision and Fed Chair Jerome Powell’s press conference later today.
Bitcoin Price Rallies
The rally in the cryptocurrency market and the price of Bitcoin indicates that the declining U.S. CPI inflation statistic has strengthened investors’ sentiment. The market now expects the Federal Reserve to adopt a dovish approach with its interest rate projections in light of the favorable data.
In the meantime, Markus Thielen of 10X Research said earlier today that Bitcoin would rise by more than 4% if the U.S. CPI drops to 3.3%. That being stated, the market expects a bullish momentum for both the price of Bitcoin and the altcoins industry. Notably, the U.S. Dollar Index Futures dropped 0.97% to $104.175, and the U.S. 10-year Bond Yield dropped 2.81% to 4.278 after the CPI report.
Following this week’s lackluster performance, the price of Bitcoin increased by 3.60% today in response to the inflation figures, closing at $69,411.30. Notably, the cost of Bitcoin fell to $66,123.60 the previous day. According to CoinGlass data, the Bitcoin Futures Open Interest increased 2.29% over the last four hours to 523.38K BTC, or $36.37 billion.
However, there has also been a notable rebound in the altcoins industry. The price of Solana increased by over 4% to $158.43 today, while the cost of Ethereum increased by almost 3% to $3,637.36. The market will watch the FOMC decision and the Fed Chair’s remarks later today. Furthermore, the U.S. PPI inflation data, expected to be released tomorrow, will be crucial in determining how the market may move.
Also Read: A Cryptocurrency Approach to Inflation Protection
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