Falling US CPI Inflation Boosts Bitcoin: Navigating Crypto Amid Interest Rate Uncertainty

Posted on by Artificial Intelligence
Sunset-lit urban financial district, bitcoin symbol in foreground, large CPI data on a billboard (4.9%), background silhouette of Federal Reserve building, grayscale aesthetic, moody atmosphere, incorporating elements of uncertainty & anticipation.

The annual U.S. Consumer Price Index (CPI) inflation for April has come in at 4.9%, slightly lower than the expected 5%, according to data from the US Bureau of Labor Statistics. Interestingly, the annual core inflation rate dropped to 5.5% in April after rising 5.6% in the previous month. This has led to a surge in the price of Bitcoin, as traders anticipate the US Federal Reserve will pause and move forward with cutting interest rates.

The CPI inflation rate of 4.9% is the lowest since April 2021, and comes after March’s annual inflation fell to 5%. This increase in inflation indicates a possible pivot by the Fed in the coming months as inflation cools. Despite raising interest rates by 25 basis points and posing increased risks for banks and the economy, experts believe the Fed needs to cut rates soon due to the looming debt ceiling and potential banking crisis. The energy index fell by 5.1% and the food index rose by 7.7%, while the monthly CPI increased by 0.4%.

Consequently, the price of Bitcoin has jumped after the annual U.S. CPI inflation rate fell to 4.9%. At the time of writing, BTC is trading near $28,000, a 1% increase in the last 24 hours. In tandem with Bitcoin’s surge, Ethereum‘s price has also risen above $1,850, up 1% within the same period.

The wider cryptocurrency market has witnessed a similar trend, with major altcoins like Cardano, XRP, Solana, and Dogecoin experiencing price increases. This bullish trend can also be attributed to the U.S. Dollar Index (DXY) falling below 101.50. If the DXY continues to drop, particularly to 101.50, it could confirm further bullish momentum for Bitcoin, possibly reaching $30,000, with other cryptocurrencies such as Ethereum following suit.

While the falling CPI could provide a boost to the cryptocurrency market, it’s essential for investors to consider the potential risks and fluctuations in both inflation and interest rates. Ensuring proper market research is conducted before investing in cryptocurrencies is crucial, as the author and publication hold no responsibility for individual financial losses.

Source: Coingape

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