- US headline Consumer Price Index (CPI) rose by 3.7% on a yearly basis in August, exceeding expectations.
- Core CPI annual inflation came in at 4.3%, in line with forecasts
- Bitcoin price hovers above $26,000, with most of the crypto market noting a minor decline.
United States Consumer Price Index (CPI) data was released by the US Bureau of Labor Statistics (BLS). While the market was expecting an increase in inflation on a yearly basis, it was taken by surprise as the actual CPI rate exceeded the forecasts. Bitcoin price noted a slightly bearish initial response, as did most of the top altcoins.
US CPI exceeds expectations
The headline inflation measured by the CPI came in at 3.7% against the predicted 3.6% year-on-year, rising from July’s 3.2% rate. Core CPI annual inflation – which excludes food and energy prices – took a downturn to 4.3%, in line with forecasts, against 4.7% in July.
The larger-than-expected rebound in prices leaves room for a hawkish message from the Federal Reserve, according to FXStreet analyst Matias Salord. This could potentially impact the decision-making of the Federal Open Market Committee (FOMC) meeting scheduled next week. Higher interest rates could be on the cards, although hikes might not take place soon.
Bitcoin price stands mostly unaffected
Bitcoin price, at the time of writing, continued to hover above $26,000. The initial reaction was expected to be bearish since higher inflation usually translates to lower demand for riskier assets. This would impact BTC negatively, potentially pushing it below $26,000.
BTC/USD 1-day chart
However, the initial reaction was rather neutral, with slight bearishness in the past hour. Altcoins showed a similar reaction, as most of the declines remained within the 1% mark. Of the topmost alts, only Polygon’s native token MATIC observed the largest change, declining by 0.73% to trade at $0.5115.
Going forward, if the skepticism of the market rises, Bitcoin price is expected to take a downturn, potentially falling below $24,578 and even declining to $21,468. However, if the market surprises and continues its streak of green candlesticks to breach $26,430, BTC could initiate a recovery rally and invalidate the bearish thesis.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.