The United States revealed August’s Consumer Price Index stats on Wednesday. The data showed inflation increased by 3.7% annually, pressuring the Fed as it surpasses the 3.6% prediction. Moreover, the labor agency confirmed that inflation has surged for the second consecutive month.
The CPI increased from July’s 0.2% to August’s 0.6%, outshining the estimated 0.5%. Meanwhile, the core inflation, which excludes energy and food costs, increased by 4.3% year-on-year, plummeting from July’s 4.7%.
Crypto market outlook
Crypto enthusiasts have been awaiting CPI data, which is crucial in determining the Federal Reserve’s future interest rate decisions. The U.S. Fed introduced a 25pb hike the prior month. Meanwhile, market players remained cautious despite analysts speculating that the Fed may quit aggressive rate increments.
The cryptocurrency market remains vulnerable to economic events. While the broad financial space flashed weakness, enthusiasts track digital assets to understand the overall market’s health.
Bitcoin reacted to the CPI data with a minor move while steadying beyond $26K. Market experts anticipated a bearish response as high inflation dents demand for riskier assets. Many expected a dip below $26K.
Nonetheless, the initial reaction remained neutral, with the past hour displaying bearishness. Coinmarketcap data shows Bitcoin lost 0.28% over the last hour. Altcoins flashed similar less-than-1% dips in that timeframe.
Notably, higher inflation could prompt central banks to execute rate hikes, hurting cryptocurrency prices.
Enthusiasts should watch for increased skepticism, which can trigger price dips in Bitcoin, potentially sinking the bellwether crypto to the $24.5K region. That would translate to dominant bearishness that can peg BTC at $21.5K.
Nevertheless, maintaining the upside stance for a surprise move past $26.5K would annul the downside narrative and welcome solid recoveries.
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