Cryptocurrency Prices Rebound Following US CPI Data
In January, US inflation fell to 6.4%, below expectations, according to the BLS.
Cryptocurrencies first dipped due to higher CPI statistics, but they recovered fast.
Crypto Market Reacts to CPI Data: Initial Decline and Quick Recovery
The US Bureau of Labor Statistics reported that in January, US inflation reduced to 6.4%, which was lower than expected.
The price of cryptocurrencies first fell as a result of the higher than expected CPI numbers, but this decline quickly reversed itself. The U.S. Bureau of Labor Statistics released the Consumer Price Index (CPI) data for the month of January. The data's release was timed to a general expectation of a sharp decrease in inflation, which increased the likelihood that the Fed would further loosen monetary policy in the months to come. Instead of rising by 6.2% over the previous year as predicted, inflation in the US fell to 6.4%.
The January inflation data disappointed traders who had expected the index to stand at 6.2%. Positively, the most recent decline in inflation is the sixth straight month of such a dip, even though it falls short of market forecasts. The seasonally adjusted CPI for urban consumers rose by 0.5 percent in January, according to a US government data. This is a significant gain when compared to the same index's increase of 0.1 percent in December.
Data on Unexpectedly High Inflation
In January, the headline CPI was 6.4% as opposed to the anticipated 6.2%, and the core CPI was 5.6% as opposed to the anticipated 5.5%. As a result, there was a modest rise in the U.S. Dollar Index (DXY), which is currently at 102.95. The most recent inflation data, however, suggest a positive trend given the extreme inflation the nation has just suffered. Because the Fed's ultimate objective is for inflation to fall below 2%, the market will expect further tightening of monetary policy.
In some ways, the long-term outlook for the cryptocurrency community is favourable given that volatility will lead to money being shifted to cryptocurrencies. In the upcoming months, trading would be hedged with an eye towards the US Fed's objective of keeping inflation under control. The price of Bitcoin fell as a result of data showing higher-than-expected price rise. One bitcoin is currently worth $22,271 according to CoinGabbar, an increase of 3% over the previous 24 hours.
Whether a market fading effect will lead to an increase in confidence in crypto assets is unknown. The release of inflation numbers was accompanied by a significant level of volatility, more so than any other macro news in the prior quarter.
