Bitcoin (BTC) Surges 4% to $69.4K as CPI Data Beats Estimates, Easing Rate Cut Expectations

Bitcoin BTC/USD is surging on better-than-expected consumer price inflation data, gaining 2.5% in the past hour.

Bitcoin (CRYPTO: BTC) is showing strong gains on Friday following the release of better-than-expected consumer price index (CPI) data.

What Happened: The latest CPI data revealed no change for May, beating economist predictions of a 0.1% increase and down from the 0.3% rise seen in April.

On an annual basis, the CPI rose by 3.3%, slightly below both the previous month’s 3.4% and analysts’ forecasts.

The core CPI, which excludes volatile food and energy prices, increased by 0.2% in May, better than the expected 0.3% rise and consistent with the previous month’s 0.3%.

Year-over-year, the core CPI showed a 3.4% increase, below the anticipated 3.5% and April’s 3.6%.

In response to these softer inflation figures, Bitcoin surged to $69,400, marking an almost 4% increase within the last 24 hours.

This reaction comes after a period of stagnant inflation rates in recent months, which have remained above the Federal Reserve’s 2% target despite aggressive interest rate hikes in 2022 and 2023.

The Federal Reserve’s actions had initially led to a rapid decline in inflation, but the trend plateaued, dampening market expectations for imminent rate cuts.

Earlier this year, traders were predicting five to six 25 basis point (bps) rate cuts in 2024 by the year’s end. However, this forecast had been reduced to one or two cuts, with the first not expected until September, as indicated by the CME FedWatch Tool.

According to K33 Research, “Crypto prices have been ‘highly sensitive’ to U.S. economic data recently.”

Also Read: Donald Trump Wants ‘All The Remaining Bitcoin To Be Made In The USA’

The combination of rising inflation and decreased expectations for rate cuts contributed to Bitcoin’s drop from its all-time high of over $73,000 in March to under $57,000 in May.

Traders are now looking forward to looser monetary policies to boost the next phase of the crypto rally.

In contrast to U.S. trends, several major central banks globally, including the European Central Bank and the Bank of Canada, have already begun reducing benchmark rates.

These actions have helped push the U.S. dollar index (DXY) to a one-month high.

Investors are also keenly awaiting the release of the Federal Reserve’s “dot plot” later today.

This projection of interest rates by Federal Market Open Committee members could significantly influence asset prices.

As the market absorbs these developments, the upcoming Benzinga Future of Digital Assets event on November 19 will offer valuable insights.

Read Next: Billionaire Bill Miller Thinks Bitcoin Is Still ‘Significantly Undervalued’

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