Bitcoin Price Defies Inflation Concerns, Surges Above $26,300
Summary:
Bitcoin price remains resilient, trading above $26,300 despite higher-than-expected inflation, as reported by the Consumer Price Index (CPI). Traders gain confidence as Bitcoin surpasses the key $26,000 level after the release of the CPI report. The report indicates an overall rise in CPI, driven by temporary increases in energy prices. However, the annual core CPI, excluding food and energy, displays positive data, while institutional interest in Bitcoin and a decrease in BTC supply on exchanges contribute to market sentiment.
Bitcoin (BTC) price is trading at over $26,300 today despite a higher-than-expected rise in inflation, as per the Sept. 13 Consumer Price Index (CPI) report. Traders and analysts consider the $26,000 level crucial, and Bitcoin regained this level swiftly after the release of the CPI report, boosting confidence in the market.
The CPI report revealed that although overall CPI rose 3.7% in August, higher than July's 3.5%, Bitcoin price and equities markets gained momentum. The market appeared to react to temporary increases in energy prices, specifically gasoline, which saw a 10.6% monthly jump. However, gasoline costs have decreased on an annual basis, and the annual core CPI, which excludes food and energy, showed positive data. The annual core CPI for August was 4.3%, lower than the previous month's 4.5%. Notably, the U.S. Bureau of Labor Statistics highlighted that the shelter index accounts for over 70% of the total increase in all items less food and energy, with a 7.3% increase over the last year.
The possibility of inflation reaching the United States Federal Reserve's 2% target gives hope that interest rate hikes will pause, which is seen as beneficial for risk assets such as Bitcoin. Quinn Thompson, Head of Growth and Capital Markets at Maple, suggests that the current environment remains challenging for long-duration tech assets, leading investors to prefer high-yielding savings accounts and money-market funds. The strength in commodities also indicates that economic conditions are relatively robust and inflation remains an issue. Until these conditions change, capital availability for crypto investments may be limited.
Furthermore, the recent interest in Bitcoin from institutional investors, including companies like BlackRock and Fidelity Investments, has boosted market sentiment. Although BTC spot ETF approvals for these institutions were delayed, Franklin Templeton filed for a spot Bitcoin ETF with the SEC on Sept. 12. Despite numerous applications, the SEC has yet to approve a spot Bitcoin ETF. BlackRock, with over $8.5 trillion in assets under management, plans to use Coinbase for custodial services.
Simultaneously, the supply of Bitcoin on exchanges continues to decrease, further supporting the bullish sentiment. Since the monthly peak on Sept. 4, exchanges have seen a decline of over 40,000 Bitcoin. This withdrawal of BTC from exchanges is viewed as a positive signal, indicating that traders intend to hold it in self-custody for the long term.
Although the short-term momentum appears bullish with the release of the CPI report and the ETF application, the Bitcoin Fear & Greed Index suggests that the market is still fearful. It is currently down 9 points compared to the previous month.
Please note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.
Published At
9/13/2023 7:03:20 PM
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