Bitcoin surges past $58K after US inflation data exceeds forecasts, fueling speculation on Fed rate decisions.
The cryptocurrency market had a massive surge on Thursday with the Bitcoin price rising above $58,000. This increase comes after the most recent US inflation data which was slightly higher than market forecasts. Experts predict that these figures can affect the decision of the Federal Reserve on the interest rates, with a low possibility of a large rate cut at the next meeting.
In August, the core Consumer Price Index (CPI), which measures changes in the prices of goods and services excluding food and energy, was up by 0. 28%, surpassing the 0.2% increase that the analysts had predicted. This continued inflation implies that the Fed should be careful since high inflation rates normally make it difficult for the economy to undergo significant rate cuts.
Market Response to Economic Indicators
The release of inflation data led to the cryptocurrency market showing a positive response. By the early afternoon, Bitcoin had risen by 2.4%, reaching $58,058. Ethereum also followed the trend by increasing by 1% to $2,362. Other digital currencies such as BNB, Solana, Dogecoin, Toncoin, Cardano, Shiba Inu also saw an upward trend indicating a general positive sentiment in the digital asset market.
According to the CME FedWatch which is a tool that provides information on the expected actions of the Fed in the near future there was a change in the perceived probability of the Fed’s future actions. At the same time, the odds of a 25-basis-point reduction have risen to 85% from 66% before the data release. On the other hand, the chances of a steeper 50-bp cut have been scaled back to 15% from 34%.
Implications of Event for Crypto Market
CoinDCX Research analysts discussed the market trends and stated that neutral to positive CPI data helped to improve the market sentiment. Moreover, the recovery of the global markets has also played a role in the resurgence of Bitcoin and other altcoins.
This rally in the crypto space is occurring at a time when the mainstream markets are experiencing fluctuations due to economic conditions. The relationship between inflation data and actions taken by the Federal Reserve remains a key factor that affects both traditional and cryptocurrency markets. Cryptocurrencies are also emerging as a popular means to hedge against inflation and rate changes as investors seek ways to protect their portfolios.
