Bitcoin Surges Amid Lower-than-Expected CPI Data and Fed Rate Cut Speculations

Bitcoin rose to $69,499 after May’s CPI data showed a drop to 3.3%, fueling market optimism for rate cuts and boosting the crypto market.

The recent release of the U.S. Consumer Price Index (CPI) data for May revealed an unexpected decline, leading to notable movements in the crypto market, particularly driven by Bitcoin. 

The unadjusted CPI annual rate in May was 3.3%, slightly lower than the anticipated 3.4% and a decrease from the previous month’s 3.4%. Similarly, the unadjusted core CPI annual rate fell to 3.4%, compared to the expected 3.5% and the prior month’s 3.6%. This marks the lowest core CPI annual rate since April 2021.

The US announced that the unadjusted CPI annual rate in May was 3.3%, which was expected to be 3.4% and the previous value was 3.4%. The unadjusted core CPI annual rate in May was 3.4%, which was expected to be 3.5% and the previous value was 3.6%. The core CPI annual rate was…

— Wu Blockchain (@WuBlockchain) June 12, 2024

Bitcoin’s Price Movement

Following the release of the CPI data, the crypto market responded with notable price increases. Bitcoin’s price surged to $69,499.12, reflecting a 3.86% increase in the last 24 hours. 

This rise came amid aggressive buying of June 13 calls and a substantial increase in the funding rate, indicating market anticipation of an upside surprise. QCP Capital noted that an inline CPI print and a neutral Federal Open Market Committee (FOMC) outcome could lead to the crypto market retesting its recent highs.

Analyst Ali Martinez highlighted Bitcoin’s historical tendency to rebound after FOMC meetings. His recent chart showed Bitcoin’s price climbing from around $68,020 to a peak of $69,276.93 before a minor pullback. 

Surprise, surprise! https://t.co/ZMTzraCbzY pic.twitter.com/JPfrzvcVNo

— Ali (@ali_charts) June 12, 2024

Ali’s chart analysis indicate a sharp price increase and subsequent profit-taking. Michaël van de Poppe, founder of MN Trading, observed that lower-than-expected CPI data led to significant drops in the Dollar and Treasury yields, further fueling the bullish sentiment for Bitcoin and altcoins.

Future Expectations 

The drop in gasoline prices reportedly contributed to the unexpected decline in the CPI, leading the market to anticipate a 25 basis point interest rate cut by the Federal Reserve in November, with a 100% probability. 

However, a rate cut in September remains uncertain, per Colin Wu. This anticipation of rate cuts has bolstered optimism in the crypto market, despite a recent retracement where Bitcoin briefly fell to a daily low of $66,741.

Historical patterns and current market conditions suggest continued bullish trends, with prominent analysts viewing the dips as buying opportunities.