As an experienced financial analyst, I closely monitor market trends and economic data to provide informed insights. Based on the upcoming release of the US Consumer Price Index (CPI) data, I anticipate significant implications for Bitcoin’s price movement.
As an analyst, I believe that the upcoming release of the US Consumer Price Index (CPI) data on May 15, at 8:30 am ET, could hold significant implications for the price of Bitcoin. This anticipation is largely due to Bitcoin’s recent tendency to react strongly to macroeconomic news. Consequently, I will closely monitor this data and assess its potential impact on Bitcoin’s market dynamics.
Inflation is measured by the Consumer Price Index (CPI) through monitoring the price fluctuations of a collection of consumer items and services in the market. The forthcoming CPI report holds significance given that the previous three reports showed higher-than-anticipated inflation figures. Experts predict a potential decrease in inflation rates for April, which could bring about significant consequences for monetary policy and financial markets.
CPI Preview: What To Expect
Economists predict that the Consumer Price Index (CPI) will register a 3.4% rise year-over-year for April. This represents a slight decrease from the 3.5% increase recorded in March. Month-on-month, the growth rate is projected to slow down to 0.3%, compared to the previous month’s 0.4% uptick.
As a crypto investor, I keep a close eye on economic indicators that could potentially impact the market. The Core Consumer Price Index (CPI), which excludes the more volatile components of food and energy prices, is anticipated to follow a similar trend. According to the latest forecasts, there’ll be a decrease in annual core inflation from 3.8% to 3.6%. This would represent the lowest annual rate since April 2021. Furthermore, the monthly increase in core CPI is predicted to slow down from 0.4% to 0.3%.
Goldman Sachs economists predict that the fundamental inflation rate, represented by the core Consumer Price Index (CPI), will persist in exhibiting decelerating trends over the next few months. They forecast the monthly increase in core CPI inflation to remain around 0.25%-0.30%, gradually decreasing to approximately 0.2% towards the end of 2024. The yearly core CPI inflation rate is projected to hold steady at a level of 3.5%. Regarding another significant benchmark for the Federal Reserve, the core Personal Consumption Expenditures (PCE) inflation, it’s anticipated to reach 2.7% by December 2024.
The Consumer Price Index (CPI) usually has a substantial impact on market conditions, compared to the Producer Price Index (PPI). Yet, the true consequences for financial markets will probably become clear once experts examine both the CPI and PPI reports in detail. It’s worth mentioning that today (at 8:30 am ET) is an unusual occurrence as the US PPI data is being published a day earlier than the CPI data.
“According to well-known cryptocurrency analyst Ted, there is a strong correlation between Producer Price Index (PPI) and Consumer Price Index (CPI) data. Historically, PPI has preceded CPI numbers. As a result, the market may respond more vigorously than typical in response to any discrepancy from expectations.”
Today is a rare occasion where US PPI data is released the day prior to CPI data.
PPI + CPI data have a very strong correlation. PPI leading the way for CPI numbers historically.
Thus expect the market to react more significantly than usual on any miss on expectations.
— ted (@tedtalksmacro) May 14, 2024
How Will Bitcoin React?
Over the recent months, the Bitcoin and cryptocurrency markets have exhibited significant reactions to inflation statistics and the monetary policies set by the US Federal Reserve. According to Ted’s analysis, the imminent inflation data release could potentially boost the value of riskier assets such as Bitcoin if there is a sign of decreasing inflation rates.
He stated via X:
As a crypto investor, I’m closely watching the inflation data. The anticipation is high, as this is the first indication in a while that we might see a slowdown in inflation rates. If this trend holds true, it could be beneficial for risk assets like Bitcoin. We may be on the brink of witnessing a significant price increase.
The market feeling is reflected in Alex Krüger’s succinct statement: “When CPI remains stable or decreases, Bitcoin responds by going back to focusing on larger economic news.” This viewpoint highlights the common belief among investors that a decrease in inflation may result in easier monetary policies, which often benefit riskier assets such as Bitcoin.
At press time, BTC traded at $61,628.
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2024-05-14 14:10