Coinspeaker Bitcoin Rally to $61K as US CPI Inflation Cools to 2.9%
New data from the US Bureau of Labor Statistics reveals July Consumer Price Index (CPI) is cooling down at an annual inflation rate of 2.9%. The slowing inflation rate has reverberated across the crypto market, propelling the price of Bitcoin (BTC) to the $61,000 range.
On a year-over-year basis, the inflation data for July came below the forecasted 3% and the 3.3% recorded in June. The core CPI, excluding food and energy costs, increased by 0.2% in July, rebounding from a 0.1% drop in June. However, July’s CPI represented the smallest increase recorded since March 2021.
In the US, high inflation in recent years led to a surge in the price of consumer items. According to CPI data, grocery stores’ prices are now almost 25% more expensive than pre-pandemic levels. Global conflicts like the war in Ukraine also caused significant supply chain disruptions, leading to higher prices.
However, inflation has shown signs of cooling in recent months. The 0.1% drop in inflation recorded in June marked the lowest monthly growth rate since May 2020. While this may not translate to lower prices in consumer goods, Bitcoin quickly saw an uptrend following the July CPI data announcement. Generally, favorable US CPI and PPI inflation data hint at a smooth crypto market recovery.
As of this writing, BTC is trading at $61,385, demonstrating a 4.5% increase in the past day. The trading volume increased by 1.6% to over $31 billion within the same time frame. This uptick is substantial because Bitcoin has been experiencing short-term volatility in the past few weeks.
The uptick in Bitcoin’s price can also be attributed to bullish crypto traders capitalizing on buy-the-dip calls in anticipation of future price increases. Besides BTC, altcoins also made impressive moves in line with the macroeconomic trends. Ethereum (ETH), the second-largest digital currency, surged by 3% in the last 24 hours to trade at $2,755.
On the contrary, prices of the Dow Jones, S&P 500, and Nasdaq Composite remained flat after the CPI report announcement. This may be because investors are looking for cues on moderate price increases.
Expectations of Interest Rate Cuts in September
Experts believe the slowing CPI print will allow the US Federal Reserve to start easing its monetary policy. Specifically, the market bets on a larger interest rate cut from the Federal Reserve in September.
Before announcing its plans to lower interest rates, the central bank will still wait for future PCE inflation statistics and jobs data. Meanwhile, the subject of whether the U.S. Federal Reserve would cut its benchmark fed funds rate range at the bank’s next meeting was closed before this morning’s data.
CME FedWatch tool data reveals a 50% chance of a 50 basis point rate drop in September and odds of 100 bps rate cuts by the Fed this year.
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Bitcoin Rally to $61K as US CPI Inflation Cools to 2.9%
