Bitcoin and Ethereum Unfazed as Inflation Dips to 2.9%
Bitcoin and Ethereum– Bitcoin’s price remained largely unchanged on Wednesday, following the release of a key inflation report that came in cooler than expected. The Consumer Price Index (CPI), which tracks the prices of a wide range of goods and services, rose by 2.9% over the 12 months through July, according to the Bureau of Labor Statistics. This figure was slightly below economists’ predictions of a 3% year-over-year increase.
On a month-to-month basis, consumer prices edged up by 0.2% compared to June. This modest increase follows a historic drop in June, which marked the first monthly decline in consumer prices since May 2020. Despite the inflation report, Bitcoin’s price hovered around $61,200, marking a 3.9% gain over the past 24 hours, according to CoinGecko. Ethereum and Solana also saw similar upticks, with their prices rising by 3.9% and 3.8% to $2,740 and $151, respectively.
The latest CPI report suggests that inflation is gradually aligning with the Federal Reserve’s long-term target of 2%. This has fueled expectations that the Fed may begin easing its aggressive monetary policy as early as next month. Over the past year, the central bank has raised its benchmark interest rate to its highest level since 2007 in an effort to curb runaway inflation.
Since peaking at 9.1% in June 2022, inflation has been on a steady decline, with July’s reading marking the lowest level since March 2021. The cooling inflation has bolstered trader confidence, with many now expecting the Fed to cut interest rates in September. The big question on everyone’s mind is how significant the cut will be. According to the CME FedWatch Tool, traders currently see a 50% chance that the Fed could opt for a more aggressive rate cut of 50 basis points, rather than the more conservative quarter-percentage-point reduction.
This sentiment comes amid a backdrop of weaker-than-expected job growth in July, which rattled global markets and briefly pushed Bitcoin’s price below $50,000. The situation was further complicated by Japan’s central bank adopting a hawkish stance, which triggered the unwinding of the yen-carry trade and added more volatility to the markets. However, strong data on U.S. service sector jobs helped soothe concerns, as noted by market maker Wintermute.
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