Bitcoin Price Plunges Back Below $56,000 as US CPI Kills 50bps Fed Rate Cut Hopes – Here’s Where BTC Is Headed Next
Since graduating with a degree in economics from the University of Birmingham in 2018, Joel has worked as a financial market/cryptocurrency analyst. He firmly believes that emerging crypto technology...
The Bitcoin (BTC) price has plunged over 3% on Wednesday to back below $56,000, snuffing out the majority of what had looked like a promising rally since the start of the week.
The reversal lower in the Bitcoin price comes in wake of the latest US Consumer Price Index (CPI) inflation figures for August.
The CPI rose 0.2% MoM and 2.5% YoY, as expected. However, the Core CPI was a tad hotter than expected, coming in at 0.3% MoM versus a 0.2% expected rise.
US CPI Core (M/M) Aug: 0.3% (est 0.2%; prev 0.2%)
– CPI (M/M) Aug: 0.2% (est 0.2%; prev 0.2%)
– CPI Core (Y/Y) Aug: 3.2% (est 3.2%; prev 3.2%)
– CPI (Y/Y) Aug: 2.5% (est 2.5%; prev 2.9%)
The data is consistent with the notion that US inflation is trending back towards the Fed’s 2.0% goal.
That means the door remains open for a rate cut from the US central bank later this month.
But the data has pretty much killed the prospect that the Fed might kick off its rate-cutting cycle with a 50bps move.
As per US interest rate futures market pricing per the CME, the implied probability of a 50bps rate cut later this month was last down at 15% from 34% one day ago.
This shift in pricing has weighed on the Bitcoin price and traditional risk assets like US equities.
The S&P 500 dropped 1.4% to just above 5,400, taking monthly losses to more than 4%.
Other bearish catalysts could also be hurting risk appetite and weighing on the Bitcoin price.
Democrat Presidential nominee and sitting Vice President Kamala Harris was widely viewed as besting Republican nominee Donald Trump in their debate on ABC
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