Bitcoin Dips With Rest of Market as U.S. Inflation Holds at 3.7%

By Mat Di Salvo

Bitcoin is down following the latest U.S. Consumer Price Index (CPI) report on September inflation—and it’s brought the rest of the crypto market with it. 

The CPI, which measures the rate of price of consumer products, dropped today and showed that prices for goods and services have topped estimates but underlying inflation is slowing.

Figures from the Bureau of Labor Statistics (BLS) showed that the CPI increased 0.4% last month. That's in stark contrast to the August report, when the CPI showed that prices jumped 0.6%—the largest increase in 14 months.

In the year up to September, the CPI advanced 3.7%, while year-on-year consumer prices have come down from a peak of 9.1% in June 2022.

Bitcoin at the time of writing was trading for $26,812, a 1.3% 24-hour drop, CoinGecko shows. The biggest cryptocurrency by market cap is also down 3.3% in the past seven days. 

While Ethereum, the second biggest digital asset by market cap, has dropped 1.5% over the past day, coming in at $1,549.

Swan Bitcoin’s managing directors of private client services John Haar told Decrypt that investors had already priced in what was expected: That inflation would “remain somewhat sticky.” 

“Given the recent move higher in Treasury yields, and recent commentary from Fed officials, it appears that the Fed is likely to keep rates constant at their next meeting on November 1,” he added. 

While CoinShares head of research James Butterfill added that rising airline fares and oil prices could have a knock on effect on core inflation.

Kaiko analyst Dessislava Aubert added that due to liquidity and volumes standing at “multi-year lows,” volatility in the crypto markets was to be expected. 

But she added that "the impact of a slightly higher CPI number would be more muted now that the market sees the U.S. central bank as less likely to hike rates due to the surge in long-term bond yields."

The CPI report is used as one metric to calculate inflation in the economy, by tracking prices in goods such as gasoline and apparel. 

With inflation high in the States, investors have typically sold “risk assets” like Bitcoin that experience volatile price movements. This is because when the Fed has aggressively raised interest rates to tame inflation, making such assets less appealing. 

But that seems to be changing as some investors see Bitcoin more of a safe-haven asset, like gold. Experts also told Decrypt that CPI figures are becoming less and less relevant for the crypto market as the worst of inflation is now behind us. 

Experts are not expecting the Fed to hike up interest rates next month. 

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