What the Latest US Inflation Numbers Mean for the Bitcoin (BTC) Price
The latest US Consumer Price Index (CPI) inflation numbers were just released and Bitcoin (BTC), which rallied at the time to hit session highs in the $28,300s, seemed to like it.
According to the latest CPI report, headline inflation fell to 4.9% YoY in April, its first sub-5.0% reading in over two years.
That was a tad below the median economist forecast for a 5.0% YoY reading.
MoM price pressures came in at 0.4% as expected for both the headline and core inflation readings, while the YoY core inflation reading fell slightly as expected to 5.5% from 5.6% in March.
While the data demonstrated that US price pressures remain way above the Fed’s 2.0% inflation target, continued progress back towards this goal in the last year since the YoY CPI rate hit 9.1% last summer is being taken as good news by the market, likely explaining Bitcoin’s modest intra-day post-data pump.
Bitcoin has since seen a sharp reversal lower, dropping from above $28,000 to under $27,000 in a matter of minutes, perhaps as a result of US government movements of some of its Bitcoin holdings that were confiscated from Silk Road.
If the US government begins selling its BTC on masse, this could create significant, albeit short-term downside pressure on the Bitcoin price.
The latest Bitcoin price drop may well be algorithms trying to front-run a US government Bitcoin sale.
Investors interpreted Wednesday’s CPI data as lowering the likelihood that the Fed lifts interest rates by a further 25 bps at its June policy meeting.
According to the CME’s Fed Watch Tool, the implied odds that the Fed holds interest rates for the first time in eleven meetings next month is around 95%, up from under 80% prior to the data’s release.
Markets also upped their bets on how many rate
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