The cryptocurrency market saw a quick spike today after the newest US inflation numbers were lower than predicted. This led people to believe the Federal Reserve may slow its rapid interest rate hikes sooner than expected.
What you'll learn 👉
Inflation Drops, Markets React
The Consumer Price Index (CPI) report released showed that the core inflation rate, which leaves out fluctuating food and energy costs, rose 3.4%, down from 3.6% in April and less than the forecasted 3.5% increase. The overall CPI number was also lower than expected.
The new inflation data was welcomed by the US markets, which had been dealing with very high prices and the actions taken by the Federal Reserve to control them. As a crypto expert named Michaël van de Poppe said, the lower-than-expected numbers caused the US dollar and Treasury yields to drop a lot. This shows that the markets now think the Fed might lower interest rates.
Bitcoin and Ethereum Led the Increase
After the positive inflation news, the crypto markets saw a quick price spike. The two biggest digital coins, Bitcoin (BTC) and Ethereum (ETH), led the way. According to information from Lookonchain, Bitcoin’s price went up by 2.4% right after the inflation report came out. It jumped from around $67,990 to $69,400.
Ethereum also saw a quick increase, going from $3,545 to $3,636 in the minutes right after the announcement. This upward movement spread to other cryptocurrencies as well, with many of them also going up as market sentiment became more positive.
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Possibility for More Increase
The lower inflation numbers have made people hopeful that the Federal Reserve may start being more gentle with its policies, which could help the crypto markets even more. However, there are still some other important economic reports coming out today, like the Federal Budget Balance and announcements from the Federal Open Market Committee (FOMC).
These upcoming events could also affect market sentiment and direction. However, the positive reaction to the inflation report has brought new hope to crypto investors.
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