Markets
Bitcoin (BTC) price rises after consumer price index rises less than expected
The US Consumer Price Index (CPI) remained stable in May, beating economists’ forecasts for a 0.1% increase and down from 0.3% in April.
On an annual basis, the CPI rose 3.3%, compared to analyst forecasts and the previous month’s reading of 3.4%.
Core CPI, which excludes food and energy costs, rose 0.2% in May, better than forecasts for a 0.3% rise and up from 0.3% in April. 3.6% in April.
Bitcoin (BTC) welcomed the soft inflation reading, jumping to $69,400, an increase of almost 4% in the last 24 hours.
After inflation readings fell rapidly in 2022 and 2023 as the Federal Reserve raised interest rates, the trend stalled in the previous months at levels persistently higher than policymakers’ 2% target, pouring cold water on market participants’ expectations for rate cuts.
Earlier this year, traders anticipated five or six 25 basis point (bps) cuts in 2024 by the end of December, which shrank to one or two before today’s CPI report, with the first cut not coming until September. , O CME FedWatch Tool showed.
Cryptocurrency prices have been “highly sensitive” to US economic data recently, K33 Research observed in a report earlier this week. Recent hotter inflation numbers and the resulting fading hopes of rate cuts have driven bitcoin’s fall from all-time high prices above $73,000 in March to below $57,000 in May. Traders anticipate that looser monetary conditions will fuel the next leg of the crypto rally to record prices.
In contrast to US expectations, several major central banks around the world have already started to cut benchmark rates, with the European Central Bank and Bank of Canada cutting rates last week, which helped boost the US dollar index (DXY) for a maximum of one month.
Investors will also closely monitor the Fed’s “dot plot,” to be released later today, of Federal Market Opening Committee members’ interest rate projections, which could move asset prices.