Bitcoin and Crypto Take Off As US Inflation Cools and Bulls Take Charge

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Bitcoin and other cryptocurrencies are rapidly gaining traction US inflation rate reached its highest level in decades. The rise of bitcoin has been attributed to increased demand from institutional investors, with many believing it to be a better store of value than traditional fiat currencies.

Furthermore, crypto bulls are driving the market higher with their optimistic outlook on the future of the digital asset. With its growing adoption, bitcoin and other cryptocurrencies may soon become a viable alternative to traditional currency systems.

Today, the financial markets are expecting Bureau of Labor StatisticsOn US CPI data 13:30 GMT.

US CPI figures can have a significant impact on the price of crypto assets. Typically, a large divergence in the CPI data causes massive price movements in the cryptocurrency market. With this in mind, it is important for crypto investors to understand how changes in the CPI can affect their investments and how to manage their portfolios accordingly. So let’s take a look at what CPI is and what we can expect from it.

What is the US Consumer Price Index (CPI) and how does it work?

The US Consumer Price Index (CPI) is an economic indicator that measures the average change in prices over time for a basket of goods and services. It is used to measure the rate of inflation in the United States as well as to assess changes in purchasing power.

The CPI calculation takes into account many factors such as changes in the prices of food, housing, transportation, medical care, and other goods. By tracking CPI numbers over time, economists can identify trends in consumer spending habits and make predictions about future inflation rates.

Understanding how the US CPI works is essential to making informed decisions about investing and managing personal finances.

How do changes in the CPI affect the price of crypto?

Changes in the CPI can have both positive and negative effects on the price of cryptocurrencies. Inflationary pressures from higher CPI figures could lead to increased demand for crypto assets as investors seek a hedge against inflation, while deflationary forces from lower CPI figures could lead to a decrease in demand and volatility in cryptocurrency prices.

inflation In the United States, it is expected to decrease for the sixth month in a row, by 6.5% in December 2022 (from 7.1% in November), the lowest level since October 2021. After rising for four consecutive months, and after an increase of 0.1% in November CPI It is expected to flatten in the coming months.

Core inflation is forecast to fall to an annualized 5.7%, the lowest level in over a year, but monthly core inflation is forecast to rise at a slightly faster rate to 0.3% from 0.2% in November.

US CPI Chart – Source: forex factory

While June 2022’s 9.1% inflation rate may be its all-time high, it still indicates a moderate increase in price levels, especially in the services sector, and is more than three times the Fed’s 2% target .

Bitcoin Price Prediction – CPI Results

So now that you understand what the CPI is and how it affects the cryptocurrency market, we can expect two results from the CPI data today.

If the CPI figure beats analysts’ expectations of 6.5%, cryptocurrency prices could rise. Bitcoin could move higher by breaking the immediate double top resistance at $18,250 and aiming for the next resistance at $19,000 or $19,450.

Bitcoin Price Chart – Source: Tradingview

Alternatively, a lower-than-expected 6.5% CPI figure could trigger a selloff in the cryptocurrency market, pushing BTC down to the $17,500 support area.

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