The release of the US Consumer Price Index (CPI) data for May 2023 by the Bureau of Labor Statistics on Tuesday has sparked optimism in the market. The department reported that the Consumer Price Index for all urban consumers rose by 0.1% on a seasonally adjusted basis, while it increased by 4% over the past 12 months without seasonal adjustment. These figures align with expectations and signify that inflation has eased, with the annual inflation rate reaching its lowest point in nearly two years.
Market participants eagerly awaited the CPI data, anticipating signs of diminishing inflation. Forecasts predicted a 0.1% price increase, following the 0.4% rise observed in April 2023. Additionally, market participants eagerly anticipate the outcome of the Federal Open Market Committee (FOMC) meeting scheduled for June 14, 2023, where a decision on a potential pause in interest rate hikes is expected.
The CPI Index, often called inflation numbers, provides insights into the average changes in costs incurred by urban consumers for goods and services over time. In the lead-up to the release of the CPI data, Bitcoin experienced a surge in price, propelling it to the $26,000 range within the past 24 hours. Subsequently, following the data release, the price of BTC registered a 3% increase from its daily low of $25,700, followed by a minor correction.
The news of easing inflation and the lowest annual inflation rate recorded in two years may bolster the confidence of US Federal Reserve officials in considering another pause in interest rate hikes. The CME FedWatch Tool, which assesses the probability of changes in the Federal target rate, indicates a 100% likelihood of a rate hike pause in the upcoming meeting.
The positive implications of the CPI data on Bitcoin’s price demonstrate the influence of macroeconomic indicators on the cryptocurrency market. As investors digest the news of easing inflation, they eagerly await the Federal Reserve’s decision on interest rates, which could further shape market sentiment and the future trajectory of Bitcoin and other digital assets.
