We do the research, you get the alpha!
Bitcoin continued to trade flat at roughl$31,700 on Wednesday after the U.S. Bureau of Labor Statistics (BLS) published June’s inflation data, reflecting a monthly Consumer Price Index (CPI) increase of 0.2%, and a yearly increase of 3.0%.
Ethereum also only faced a minor gain of 1.3%, per CoinGecko, and is now trading at nearly $1,900.
The increase fell just short of economists' estimates as polled by Dow Jones, which expected a 0.3% month-over-month increase, and an annual rise of 3.1%.
Meanwhile, core CPI–which discounts the food and energy sectors due to their known volatility–rose by just 0.2% which is the “smallest 1-month increase in that index since August 2021,” per the BLS.
Since March 2022, the Federal Reserve has rapidly risen its policy interest rate in a mission to bring searing inflation back to its 2% target in the United States, after peaking last June at 9.1%.
So far, the central bank’s efforts seem to be paying off, with annualized inflation down 1% from last month alone.
Sadly for investors, rising interest rates have also contributed to cratering stock and crypto prices throughout the last year, with both major tech and blockchain companies being forced to enact massive layoffs.
As such, falling inflation is generally taken as bullish for markets, since it means the Fed is closer to ending its hawkish monetary policy.
While the central bank chose to keep its policy rate unchanged last month, Fed Chairman Jerome Powell has been hesitant to indicate whether this means rate hikes will pause or resume in the near future.
According to the CME FedWatch tool, markets are 91% confident that another 0.25% rate hike is in the cards at the next Federal Open Markets Committee Meeting (FOMC) on July 26.
Markets are still waiting on June’s Personal Consumption Index (PCI) figures, which track how consumers change their buying habits over time. This is the Fed’s preferred measure of inflation as it’s considered a strong predictor of where inflation is headed in the future. It currently projects this figure at 3.2%.
Bitcoin’s non-reaction on Wednesday may be an indication of its current place in its cyclical market cycle.
As reported by Glassnode on Monday, Bitcoin’s price has reached an “equilibrium point” which often signals an incoming “accumulation phase” during which the asset’s price trades flat for many months to come.