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CPI report may boost Bitcoin prices

CPI report may boost Bitcoin prices

GrafaGrafa2024/10/11 03:25
By:Isaac Francis

According to digital assets firm 21Shares, the recent U.S. Consumer Price Index (CPI) data may create a favorable environment for Bitcoin (CRYPTO:BTC) and other cryptocurrencies. 

The U.S. Bureau of Labor Statistics reported a 2.4% annual rise in CPI for September, slightly above the expected 2.3%. 

Despite this, inflation continues on a cooling trajectory, which is fueling optimism for interest rate cuts by the Federal Reserve. 

The CPI data marks the lowest inflation rate since February 2021, down from August’s 2.5%. 

This follows a peak of 9.1% in June 2022. 

According to 21Shares, lower inflation rates and recent labor data—where unemployment dropped to 4.1%—have led to an 80% probability of a 25 basis point rate cut in the coming month. 

Leena ElDeeb, a research analyst at 21Shares, explained that “Bitcoin and a broader array of crypto assets are particularly sensitive to inflation metrics, as these indicators heavily influence the Fed’s monetary policy decisions.” 

She added that rate cuts would likely reduce borrowing costs, creating a favorable scenario for Bitcoin’s price recovery, especially after recent geopolitical tensions disrupted the financial landscape. 

Despite this potential boost, Bitcoin's price remained down 1.6%, trading at $60,604 at the time of writing. 

Economic uncertainties persist, as weekly jobless claims reached a 14-month high, with 258,000 filings. 

Nonetheless, data from CME Group’s FedWatch indicates an 89% chance of a 25 basis point rate cut in the Federal Open Market Committee's November meeting. 

At the time of writing, the Bitcoin price was $60,097.19.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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