The higher-than-anticipated US core Consumer Price Index (CPI) reading was followed by a decline in Bitcoin (BTC) price as it tumbled almost 1.5% to $56,168 at press time.
US headline CPI meets forecast but core CPI surpasses it
US headline CPI is the standard metric used to measure the rate of inflation in the US. came According to the expectations, in August 2024 it is expected that inflation will be 0.2% MoM and 2.5% YoY. The core CPI for August 2024 was 0.3%. This is slightly above the economists’ forecast of 0.2%.
Uninitiated people may not realize that there is a difference in the items included in the baskets they use to calculate the CPI. The headline CPI includes all categories of items, such as housing, transportation and services, health care and food. Core CPI, however, excludes these two to provide a stable picture of inflation.
The core CPI can be considered more accurate because it does not include volatile products in its calculations.
BTC experienced a rapid decline after an unexpected print of the core CPI. The price fell quickly from approximately $57,000 to just $56,168 as I typed this. As well as Ethereum (ETH), Binance Coin BNB), Solana SOL and Ripple XRP, the larger crypto market also displayed similar trends. These were down by 2,1%, 1,3% 4,6% and 24%.
It is almost certain, now that CPI for August of 2024 has been released, that the US Federal Reserve’s (Fed), will commence its rate cut cycle by slashing rates 25 basis point (bps) in September. Capital Economics’ Paul Ashworth wrote a letter. said:
We still believe that the Fed’s rate-cutting cycle will start with a modest 25 basis points cut. The 5.2% rise in the price of shelter was largely responsible for the 3.2% annual CPI. Meanwhile, the core CPI three-monthly annualized only increased to 2.1%.
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According to the Federal Reserve, after the CPI release the likelihood of the Fed cutting rates next week by 25 basis points has increased from 83%. data CME FedWatch. If the Fed cuts rates by 25 basis points, this should give crypto and stock markets some confidence., fearing If the Fed cuts its inflation target by 50 basis points, it could be a sign that they are not fully confident of their ability to do so.
What lies ahead for Bitcoin?
BTC is still confined to a range of $52,000-$70,000 in the daily chart. Analysts are now speculating about the possible future path the price of the top digital asset could take.
Analysts opine BTC’s price movement is similar to a price consolidation that took place in 2023. The same scenario could play out in 2024 and we may see Bitcoin reach a new all-time high (ATH).
The impact of US Presidential Elections in 2024 will be fascinating to watch. Interesting enough, there are some analysts who have a problem with election predictions. stated BTC, regardless of who is elected later in this year will be the winner on the long run.
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Bitcoin was trading for $56,168 at the time this article was written, and the market cap of all cryptocurrencies is $1.94 billion, down by 2.3% over the last 24 hours.
Charts are from cmegroup.com.
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Source: www.newsbtc.com
