Today’s US inflation report revealed that Consumer Price Index (CPI) data hit exactly the target, showing a 2.7% year-on-year increase and 3.3% increase for the CPI core, bringing the price of Bitcoin back above $100,000.
When inflation numbers match expectations, markets generally react favorably, including cryptocurrencies. Out of the news, BTC .cwp-coin-chart SVG path {stroke:; stroke width: ; }
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it quickly surpassed $101,000, followed by a rally in altcoins.
Inflation report today and Bitcoin price stability
Bitcoin’s reputation as a hedge against inflation keeps it tied to the ebb and flow of economic data. When prices rise, it becomes the go-to hedge. But when the consumer price index cools, it doesn’t even flinch: lower inflation is often a sign that the Fed may be easing rates, and this optimism tends to spread across BTC price charts.
For November, the consumer price index increased 0.2% monthly, in line with October’s increase. Market forecasts held true, signaling that the Federal Reserve’s efforts to tame inflation may be successful. Bitcoin rallied 6% on the news.
What’s the Federal Reserve’s next move?
The timing of the CPI data couldn’t be more precise. With a quarter-point rate cut looking like a lock for the Fed’s next meeting, all eyes are on the numbers. A solid November jobs report – 227,000 positions added – only added weight to the balance for more accommodative monetary policy.
Stable inflation numbers reduce the likelihood of unexpected policy changes such as aggressive rate hikes, which are generally bullish for risky assets, including Bitcoin. Since tighter monetary policy often limits liquidity, markets interpret stable rates as a warning sign for growth investments like cryptocurrencies.
Bitcoin has shown remarkable resilience after dropping below $94,000 earlier this month.
This sentiment is key in December, a historically volatile month. A combination of favorable CPI data, a likely rate cut, and steady economic growth suggest that BTC could maintain its bullish trajectory through the end of the year.
BREAK:
*ODDS OF DECEMBER RATE CUT TO 25 BPS ON FED FUNDS FUTURES INCREASE TO 97% AFTER CPI REPORT$SPY $QQQ
pic.twitter.com/PBrPHvoDg4
— Investing.com (@Investingcom) December 11, 2024
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Wider market implications from today’s inflation report
Following the announcement of the CPI results, financial markets rebounded, with the S&P 500, Dow Jones and Nasdaq all recovering. High corporate profits in some sectors, such as technology, explained pockets of growth, while rising Treasury yields created some drag.
For cryptocurrencies, however, history has an even greater impact. Stable inflation rates and potential easing of monetary policy preserve the liquidity environment necessary for risky assets to thrive. Bitcoin and the rest of the cryptocurrency market could see continued upside relative to current macro trends.
All eyes are on the Fed meeting on December 17-18, the next key moment that could change the playing field for investors. A confirmed rate cut could further solidify Bitcoin’s position by making risky assets more attractive than bonds or cash.
In the meantime, investors should continue to monitor monthly CPI updates as they continue to have a fundamental influence on overall market sentiment.
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