Bitcoin Surges Following Unexpected Dip in US Inflation Data
Summary:
Bitcoin's price rapidly increased in response to an unexpected drop in US inflation data. The Consumer Price Index (CPI) revealed a faster than anticipated cooling of inflation, leading to a $1,500 increase in Bitcoin's value within seconds. While financial markets await a potential shift in interest rate policy during the upcoming Federal Reserve's Federal Open Market Committee (FOMC) meeting, the weakened US dollar in response to the inflation news could serve as a strong indicator for the future of Bitcoin and other cryptocurrencies.
Bitcoin's value surged briefly on June 12 as US inflation data reported an unanticipated reduction. According to information from Cointelegraph Markets Pro and TradingView, Bitcoin's price accelerated rapidly to $69,636 on Bitstamp. The sudden boost in Bitcoin's price, which increased by $1,500 within seconds, followed the reveal of May's Consumer Price Index (CPI), which indicated an inflation decline beyond projections. Month-to-month CPI statistics showed no change from the previous month, while the annual rate stood at 3.3%, both 0.1% lower than anticipated.
"The total index increased by 3.3 percent over the 12 months ending in May, a lesser increment than the 3.4 percent rise for the 12 months ending in April. Over the past 12 months, the index for all items except food and energy climbed 3.4 percent," stated an official press release from the US Bureau of Labor Statistics.
This development proved beneficial for risk assets, including cryptocurrencies, which had previously been struggling before the CPI release - a typical behavioural pattern for Bitcoin and other altcoins.
Market participants now await the upcoming June session of the Federal Reserve's Federal Open Market Committee (FOMC), due later in the day. The decision on interest rate shifts and Federal Chair Jerome Powell's economic commentary will play a crucial role in shaping market sentiment.
Financial commentator Tedtalksmacro expressed a positive outlook in response to the recent developments, suggesting that Powell could now consider adopting a more relaxed financial policy involving high rates. "J. Powell can now discuss easing. Let's proceed," he succinctly summarised on X (formerly Twitter).
Meanwhile, Michaël van de Poppe, founder and CEO of the trading company MNTrading, highlighted the declining strength of the US dollar following the data release. "The Dollar and Treasury Yields have seen a significant decline as the markets anticipate rate cuts," he pointed out. "This could be a major indicator for Bitcoin and Altcoins."
Bitcoin thus managed to recover losses incurred in the previous week due to US employment data. Further such figures are expected towards the end of the week, maintaining the potential for more Bitcoin price fluctuations. Current predictions from CME Group's FedWatch Tool suggest shifting market expectations for rate cuts, with the probability for the September FOMC meeting now exceeding 70%.
Published At
6/12/2024 4:19:12 PM
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