US CPI Comes in At 2.9%, Will Bitcoin Price and Crypto Market Slump Or Surge?

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The crypto community has been anxiously looking forward to the release of the US Consumer Price Index (CPI) data because it’s considered a significant economic occurrence that impacts the market. The December 2024 US CPI report shows that inflation climbed up to 2.9%, representing a 0.2% increase from the 2.7% recorded in November. Consequently, the price of Bitcoin surged above $98.5K, as it matched market predictions and the core CPI inflation rose less than anticipated.

The US Bureau of Labor Statistics’ recent report shows that the Consumer Price Index (CPI) has risen by 2.9%, marking the third consecutive increase in this index. Contrary to market expectations, the CPI didn’t remain constant at 0.3% monthly; instead, it increased from last month’s 2.7%. Additionally, predictions indicated that the year-over-year (YoY) CPI would climb to 2.9%.

Contrary to expectations that the monthly Core Consumer Price Index would decrease slightly from 0.3% to 0.2%, it stayed steady at 0.2%. However, contrary to predictions that the Year-over-Year Core CPI would hold steady at 3.3%, it actually decreased slightly to 3.2%.

US CPI and Federal Reserve’s Upcoming Rate Decision

According to CoinGape’s report, upcoming Federal Reserve decisions regarding interest rates at the FOMC meeting on January 28-29 could be impacted by the latest US Consumer Price Index (CPI) inflation data, Producer Price Index (PPI), and employment data. Some experts have warned that these indicators might make it less likely for the Fed to lower interest rates even further due to potential decreases in inflationary pressures. The most recent US CPI figures are currently being analyzed.

The recently published US Producer Price Index (PPI) data, released on January 24, has eased market sentiments as the inflation rate came in lower than anticipated. The data showed an inflation rate of 3.3%, which is below the projected range of 3.5%. Additionally, the core PPI inflation rate was also less than expected at 3.5%, rather than the predicted 3.8%. This unexpectedly low inflation rate from the US has reportedly halted the recent increase in U.S. Treasury bond yields and encouraged investors to seek riskier assets. However, it remains uncertain how these US CPI and PPI reports will impact the trends within the global crypto market.

Following a two-day peak surpassing 110, the U.S. dollar index (DXY) dropped below 109, leading to an uptick in Bitcoin’s price. Meanwhile, the yield on the 10-year Treasury bond declined by 0.09%, settling at 4.69%.

Is a High Volatile Crypto Market Ahead?

The cryptocurrency market continues to be subject to significant fluctuations and potential inflation both before and after the swearing-in of President Donald Trump on January 20th. While there’s hope within the community for potentially crypto-friendly policies from Trump, their exact effects on the market are still uncertain. With Trump’s proposed cryptocurrency initiatives in mind and the upcoming US Consumer Price Index (CPI) and Producer Price Index (PPI) reports, we can expect a rollercoaster ride in the world of cryptocurrencies.

QCP Capital has issued a warning about potential market instability in both cryptocurrency and equity sectors, stating that they remain vulnerable. Regarding Bitcoin specifically, they advise being wary of its ongoing downward trend since the $90,000 level has been repeatedly challenged.

As an analyst, I’ve noticed a 1% surge in Bitcoin (BTC) prices following the release of CPI data, with the current trading price standing at approximately $98,400. The 24-hour range has been between $95,330 (low) and $97,650 (high). Notably, the trading volume has dipped by around 21% over the past day, suggesting reduced activity among traders.

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2025-01-15 16:54