Bitcoin has fallen following the latest US Consumer Price Index (CPI) report on inflation for September, dragging the rest of the cryptocurrency market with it.
The CPI, which measures the price rate of consumer products, fell today and showed that prices of goods and services have exceeded estimates, but underlying inflation is slowing.
Figures from the Bureau of Labor Statistics (BLS) showed that the CPI rose 0.4% last month. That is in stark contrast to the August reportwhen the CPI showed that prices increased by 0.6%, the largest increase in 14 months.
In the year to September, the CPI rose 3.7%, while year-on-year consumer prices fell from a peak of 9.1% in June 2022.
At the time of writing, Bitcoin was trading at $26,812, down 1.3% in 24 hours, CoinGecko shows. The largest cryptocurrency by market capitalization is also down 3.3% in the last seven days.
While Ethereum, the second largest digital asset by market cap, has fallen 1.5% over the last day, settling at $1,549.
John Haar, Managing Director of Private Client Services at Swan Bitcoin, said Decipher that investors had already discounted what was expected: that inflation โwould remain somewhat rigid.โ
"Given the recent rise in Treasury yields and recent comments from Federal Reserve officials, it appears the Fed is likely to hold rates steady at its next meeting on November 1," he added.
While CoinShares head of research James Butterfill added that rising airfares and oil prices could have a knock-on effect on underlying inflation.
Kaiko analyst Dessislava Aubert added that with liquidity and volumes at โmulti-year lows,โ volatility in crypto markets was to be expected.
But he added that "the impact of a slightly higher CPI figure would be more muted now that the market believes the US central bank is less likely to raise rates due to rising long-term bond yields."
The CPI report is used as a metric to calculate inflation in the economy, by tracking the prices of goods such as gasoline and clothing.
With inflation high in the United States, investors have typically sold โrisk assetsโ like Bitcoin that experience volatile price movements. This is because when the Federal Reserve has aggressively raised interest rates to control inflation, these assets are less attractive.
But that appears to be changing as some investors view Bitcoin more as a safe haven asset, like gold. The experts also said Decipher that CPI figures are becoming less and less relevant to the cryptocurrency market as the worst of inflation is now behind us.
Experts do not expect the Federal Reserve to raise interest rates next month.
