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August 10, 2022

Bitcoin (BTC) Market Update As Inflation Rate Remains Unchanged

The price of Bitcoin increased after the U.S. Bureau of Labor Statistics (BLS) released Consumer Price Index (CPI) inflation statistics for July that showed no change.

Bitcoin surged from a local low of $22,600 on August 10 in anticipation of the news, as investors awaited the inflation report. BTC’s immediate response to the announcement of the information was a surge to $24,000.

The day before, crypto markets and stocks had a modest decline as investors displayed caution ahead of the BLS report — despite the fact that CPI forecasts of 8.7 percent were lower than the previous month’s estimate of 9.0 percent.

Following the most recent FOMC meeting on July 27, Fed officials announced a second straight 75 basis point increase, offering a range of 2.25 percent to 2.5 percent.

The next meeting of the Federal Open Market Committee (FOMC) will be held on September 20 and 21, with anticipation rising that the Fed will be compelled to implement another major rate rise to counteract the red-hot labor market and the increase in Average Hourly Wages.

There are two official measurements of inflation in the United States:

CPI inflation – measures the monthly change in prices paid by consumers in the United States. The CPI is calculated by the Bureau of Labor Statistics (BLS) as a weighted average of prices for a basket of goods and services that is reflective of total U.S. consumer expenditure.
The Personal Consumption Expenditures Price Index (PCEPI) tracks changes in the prices of household products and services. Inflation is indicated by an increase in this indicator, whereas deflation is shown by a drop.
The CPI is used by federal and state governments and enterprises. The PCEPI, in contrast, informs the FOMC of its inflation strategy.

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Analysts anticipate that core inflation will grow from 5.9 percent to 6.1 percent in September, putting pressure on the Fed to implement a major rate hike. The CPI data indicates, however, that recent rate rises are acting to slow the economy.

In spite of this, Citigroup analysts anticipate a 75-basis-point rate rise in the near future due to good job data and faster-than-expected wage growth. Nonetheless, a 100 basis point hike is still possible if core inflation is stronger than anticipated.