US CPI Rate Declines by 33 Leading to Surge in Bitcoin and Altcoins
Key Points
– The US Consumer Price Index (CPI) has shown a slight decrease, hinting at a possible slowdown in inflation.
– Despite this overall decline, housing costs continue to rise, presenting a challenge for the Federal Reserve’s anti-inflation efforts.
– The cryptocurrency market has responded positively to the inflation report.
The United States has reported a significant drop in the unadjusted Consumer Price Index (CPI) annual rate for May, indicating a notable shift in economic patterns. The CPI annual rate fell to 3.3%, slightly lower than the expected 3.4% and the previous 3.4%.
Similarly, the unadjusted core CPI annual rate also declined to 3.4%, below the anticipated 3.5% and the previous 3.6%. This decrease marks the lowest core CPI annual rate since April 2021.
Challenges of Inflation in the Housing Sector
Despite the general decrease in inflation rates, concerns persist, especially in the housing sector. Shelter inflation increased by 0.4% in May and rose by 5.4% year-over-year. Housing-related expenses, due to their significant impact on the CPI calculation, have posed a continuous challenge for the Federal Reserve in its fight against inflation.
Market Reactions
The crypto market has displayed signs of recovery following the CPI report. QCP, a leading market analyst, observed a surge in the purchase of 13-Jun calls, indicating that investors were positioning themselves for a possible positive outcome.
Furthermore, there was a notable rise in the funding rate, suggesting a market ready to retest its highs if the CPI figures align with expectations and the Federal Open Market Committee (FOMC) meeting results are neutral. This alignment has sparked a rapid recovery across almost all top ten cryptocurrencies.
Bitcoin responded favorably to the CPI data release, increasing by 2% at the time of reporting. Ethereum followed suit with a 2.4% rise. Other major cryptocurrencies like Binance Coin (BNB) and Solana (SOL) also saw gains of 2.2% and 3.8%, respectively.
Bullish Sentiment in the Markets
Bitcoin and Ether spot prices remained relatively stable as traders eagerly awaited the CPI data release and FOMC meeting outcomes. The bullish sentiment is currently strong, with QCP highlighting that BTC futures swap points rebounded from a low of 10%, rallying as traders closed their short futures positions to capitalize on their basis trades.
This optimistic environment suggests that yields could surge, potentially surpassing 15%. Bitcoin could potentially reach $70K in the near future, given the current positive market momentum.
Also Read:
Why Bitcoin Price Surged Above $69K Today?
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