US CPI Data Comes in Above Estimate, at 8.2%; Bitcoin Dips in Tandem with Other Risk Assets.
CPI data for September comes in at 8.2%, as most risk assets, including Bitcoin and S&P 500 index futures, see a fall.
Bitcoin’s price movements have been majorly influenced by the asset’s recent correlation with traditional finance. Bitcoin’s correlation with traditional risk assets puts the asset at risk of responding to unfavorable macro conditions. The cryptocurrency community has witnessed the scene play out several times in the current cycle.
Recently, the latest U.S. CPI report has precipitated a wave of FUD into traditional finance and, by extension, the crypto markets. CPI data suggests an 8.2% increase in inflation rate YoY, with a 0.4% increase for the month, as opposed to the 0.3% estimate.
Despite indicating a decrease from 8.3% in August, the 8.2% rate in September is above the expected estimate of 8.1% YoY. Top banking giants such as Bank of America, Goldman Sachs, and JPMorgan forecasted an 8.1% estimate. Barclays and Credit Suisse predicted an 8% estimate.
Despite the drop from last month’s annual rate, the rate remains historically high, representing one of the highest rates the U.S. has seen in about 40 years. The 0.4% monthly increase in September is also above August’s rise of 0.1%.
Risk assets have expectedly responded unfavorably to the report, as the data further confirm the Federal Reserve’s tendency to raise interest rates by another 75-basis point in November.
In particular, the S&P 500 has plummeted by 1.39% in the past day, changing hands at $3,527 as of press time. Additionally, the Nasdaq Composite has decreased 2.18% in the past 24 hours, sweeping $228 from its value to trade at $10,188 at the reporting time.
The Dow Jones Industrial Average has fallen by 0.92%, having summarily touched a 2-year intraday low. Amazon (AMZN) has decreased by 3.71%, with Tesla (TSLA) seeing a 4.21% dip in the past day.
Notwithstanding the economic decline, U.S. President Joe Biden remains confident in the country’s fight against inflation. In a recent statement on the latest CPI report, Biden noted that the U.S. is progressing in its fight against economic deterioration.
Biden highlighted the Inflation Reduction Act as one of his administration’s offenses against inflation, pointing out its benefits.
Today’s report shows some progress in the fight against higher prices, even as we have more work to do. Inflation over the last three months has averaged 2%, at an annualized rate. That’s down from 11% in the prior quarter…
Because of my economic plan, the United States is in a stronger position than any major economy to take on this challenge. And my policies—that Democrats delivered—directly tackles price pressures we saw in today’s report, like health care…“ he remarked.
In the onslaught, the crypto markets have not been spared, as most mainstream assets are seeing some significant dips. Bitcoin and Ethereum have fallen by 3.36% and 5.61% in the past 24 hours.
The dip has breached the BTC support at $19k, which the asset had held on to for over two weeks. Bitcoin has shed 7.60% of its value in the past seven days, as it currently trades at 18,460 against the dollar as of press time.
The macroeconomic climate is unfavorable for Bitcoin, as its goal to conquer the $20k level has faced fierce opposition. The asset has been relegated below the $19k level and has to battle its way above it despite several proponents predicting an auspicious October for the crypto markets.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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