The United States released consumer price index statistics for August on Wednesday. The data showed that inflation increased by 3.7% annually, pressing the Federal Reserve by exceeding the 3.6% prediction. In addition, the labor agency confirmed that inflation has increased for the second consecutive month.
The CPI rose from 0.2% in July to 0.6% in August, eclipsing the 0.5% estimate. Meanwhile, core inflation, which excludes energy and food costs, rose 4.3% year-on-year, plummeting from 4.7% in July.
Crypto Market Outlook
Cryptocurrency enthusiasts have been awaiting the CPI data, which is crucial in determining the Federal Reserve's future interest rate decisions. The US Federal Reserve introduced a 25 bp increase the previous month. Meanwhile, market players remained cautious even as analysts speculated that the Federal Reserve could abandon aggressive rate increases.
He cryptocurrency market remains vulnerable to economic developments. While the broad financial space showed weakness, enthusiasts track digital assets to understand the overall health of the market.
Bitcoin reacted to the CPI data with a minor move as it stabilized above $26,000. Market experts anticipated a bearish response as high inflation reduces demand for riskier assets. Many expected a drop below $26,000.
However, the initial reaction remained neutral and the last hour was bearish. Coinmarketcap data shows bitcoin lost 0.28% in the last hour. Altcoins showed similar drops of less than 1% in that time period.
In particular, higher inflation could lead central banks to execute rate hikes, hurting cryptocurrency prices.
Enthusiasts should be on the lookout for rising skepticism, which may trigger price drops in Bitcoin, potentially sinking the leading cryptocurrency to the $24.5K region. That would translate into a dominant bearish trend that may peg BTC at $21,500.
However, maintaining the bullish stance for a surprise move above $26,500 would negate the bearish narrative and welcome solid recoveries.
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