Bitcoin Yawns As Fed’s Favorite Inflation Gauge Eases
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U.S. core CPI rose 0.2% month-over-month and 2.5% year-over-year — the slowest pace since March 2021 — easing pressure on the Federal Reserve to hike rates and improving the outlook for non-yielding crypto assets; Bitcoin traded around $63,863 and was flat over 24 hours and the past week. Spot Bitcoin ETFs saw the biggest inflows since April last week, signaling funding and adoption momentum, though the market remains volatile with Bitcoin down nearly 30% year-to-date and the sector hit by a Coldcard hardware wallet exploit and a delayed Clarity Act vote.
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Bitcoin Yawns As Fed’s Favorite Inflation Gauge Eases
Bitcoin’s price dipped slightly before remaining mostly steady after data on Wednesday showed that U.S. inflation was subdued.
The price of the largest cryptocurrency recently stood at $63,863, mostly unmoved over a 24-hour period. Over the past week, Bitcoin is also flat.
The core consumer price index, which excludes often-volatile food and energy categories, rose 0.2% from a month earlier and increased 2.5% from a year earlier — the slowest pace since March 2021.
Energy and gas prices fell for a second month and grocery prices dropped for the first time since March, according to the print.
The news takes the pressure off Federal Reserve Chairman Kevin Warsh to raise interest rates in September.
Softer inflation data eases the path toward rate cuts, and lower rates reduce the opportunity cost of holding an asset that pays no yield. Bitcoin has typically performed well in a low-interest rate environment.
Sticky inflation in the world’s biggest economy has led the Federal Reserve to take a cautious approach with interest rates. Despite Wednesday’s softer inflation data, prices are still higher than they were a year ago and wages in the U.S. are not keeping up.
Bitcoin has faced increased volatility since the U.S. and Israel attacked Iran in February, with the leading cryptocurrency dropping hard on initial reports of war. Bitcoin is now down nearly 30% year-to-date.
Still, in recent weeks, investors have shown a growing appetite for the asset. Spot Bitcoin exchange-traded funds in the U.S. have experienced massive inflows — the biggest since April last week — despite negative news for the crypto industry: a massive exploit of the popular Coldcard Bitcoin hardware wallets last month shook crypto investors and a vote on the long-awaited digital asset market structure bill, the Clarity Act, has been delayed.
This post Bitcoin Yawns As Fed’s Favorite Inflation Gauge Eases first appeared on Bitcoin Magazine and is written by Mathew Di Salvo.
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