The trend of the crypto market and bitcoin over the past few days has been completely unpredictable. The market is feeling the heat from the bears as most crypto assets move south. Furthermore, the FTX crisis has brought a distinctly contagious negative performance to the increasingly space.
Bitcoin had a complex swing as the coin fell from its crucial level of $20K. BTC price has dropped to around $16K area. The disclosure of the full situation and events is creating more fear and suspicion for most of the participants in the crypto industry.
However, the primary crypto asset has shown signs of revival within a few minutes of today’s trading hours. The US Bureau of Labor Statistics recently released the latest report on the inflation rate in the country. Unfortunately, the October Consumer Price Index data is out.
CPI data beats expectations, bitcoin remains in recovery mode
As per the data, the CPI for October stands at 7.7%, showing an increase of 0.4% through its seasonal adjustment. This latest report turns out to be better than expected. Hence, bitcoin reacted positively within minutes of the news being published.
Due to current flows into the general economy, most expectations for the CPI report were around 8%. But the reality of value has brought a positive change in the crypto market.
According to the data, the price of BTC suddenly rose to $17,800 and then fell. The coin is currently trading between $17,278 and $17,400.
Compared to September’s CPI data of 8.2%, this latest CPI report proves to be excellent news. Core CPI data without food and energy rose 0.3% in October. The trend is slower than the expected 0.5%, down from 0.6% in September.
The annual comparison shows that the core CPI grew by 6.3% in October, lower than the expected 6.5 per cent and 6.6% in September.
Implications of CPI Report
The CPI report is one of the measures used by the US Federal Reserve to determine the inflation rate in the country. Therefore, this October data is an essential report for the Fed before the General Federal Open Market Committee (FMOC).
The next and final FOMC meeting of the year is scheduled for December 14-15. The FOMC will again increase its benchmark for the fed funds rate at the meeting. If this happens, it will mark the 7th such rate hike in 2022.
The Fed is taking a tough stance to control inflation. It is raising interest rates by 75 bps in a few months due to higher CPI data.
The crypto market is showing correlation with macroeconomic factors. Therefore, reports on CPI data usually affect the prices of crypto assets, as it has now. Moreover, excellent CPI data has created a spike in equity futures as they are expected to ease Fed’s stringent measures.
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