Markets
Bitcoin, Mantra, Notcoin Prices Rise as US CPI Data Points to Fed Cut
Bitcoin and other altcoin prices continued to rise after the US released encouraging inflation data for June.
BTC jumped to over $59,000 on Thursday, up from last week’s low of $53,700. Other tokens like Mantra (OM), Notcoin (NOT), AAVE (AAVE) and JasmyCoin (JASMY) rose double digits.
US inflation data
Data from the Bureau of Labor Statistics (BLS) showed that the consumer price index (CPI) fell from 0.0% to -0.1% in June, which was lower than the median estimate of 0.1%.
The core CPI fell to 3.0% from 3.3%, also below the median estimate of 3.1%. At the same time, the core CPI fell to 0.1% from 0.2% and to 3.3% from 3.4%.
These numbers indicate that inflation is moving in the right direction, which could influence the Federal Reserve’s next moves. In a statement this week, Jerome Powell noted that the bank would consider cutting rates if inflation continues to fall.
Most economists expect the Federal Reserve to make its first rate cut at its September meeting. In addition, high-frequency data shows that both manufacturing and non-manufacturing PMIs fell below 50 in June.
US CPI #inflation fell short of consensus forecasts across the board.
Monthly inflation in June was -0.1 (the consensus forecast was 0.1), reducing the annual measure to 3.0% (3.1%).
The core was 0.1% (0.2%) and 3.3% (3.4%).
This will encourage markets to…— Mohamed A. El-Erian (@elerianm) July 11, 2024
Another report from the Bureau of Labor Statistics (BLS) showed that the unemployment rate rose to 4.1% while wage growth slowed.
Impact on Bitcoin, Mantra and Notcoin
Cryptocurrencies tend to perform well when the Fed takes a more dovish stance, as seen earlier this year when Bitcoin hit a record high as the Fed signaled possible rate cuts.
Interest rate cuts are likely to prompt investors to shift from safe money market funds to riskier assets like Bitcoin, Mantra, and Notcoin. Other altcoins like Ondo Finance, Near Protocol, and Pepe could also continue to rally.
These currencies could join other assets such as stocks in their strong rally, with the Nasdaq 100, S&P 500 and Dow Jones hitting all-time highs.
However, the cryptocurrency industry faces other risks that could affect prices. For example, the available supply of Bitcoin is increasing as the German government continues to dump its assets. Miner’s capitulation persists, as Mt.Gox distributions continue.