The US September inflation print has kept markets under a confusing turn, with no clear idea of what the future of the Fed’s rate decision would be. In an initial reaction to the news, Bitcoin prices fell 1.8%, making it a sharp dip for the day, but recovered some grounds later.
According to a report released on Thursday, October 10th, by the Labor Department’s Bureau of Labor Statistics, the consumer price index rose by 0.2% in September after showing the same gains during the last month.
In the 12 months ended September, the CPI increased by 2.4%. This was the lowest annual growth in over 3.5 years, and it came after a 2.5% gain in August.
The CPI was expected to increase by 0.1% for the month and 2.3% annually by economists surveyed by Reuters.
Bitcoin Prices Tumble Over 1.8%
Bitcoin prices tumbled over 1.8% after the news broke, making investors digest the inflation print. The price stood at $60,795 after the data release but then rose to $60,881.72 soon after.
Today’s inflation numbers hold a huge importance for global markets alike. The data will help the US Fed gauge its rate cut trajectory, which can fuel growth in financial markets.
The Fed is currently dealing with growing unemployment and rising inflation in a low-growth environment. Although September’s increase in US consumer prices was marginally higher than anticipated, the annual increase in inflation was the lowest in almost three and a half years, which may put the Federal Reserve on pace to lower interest rates once more next month.
However, if the rate cut does not happen, it will might be a bear signal for Bitcoin price as investor appetite might diminish a little.
Rate cuts usually make government securities less desirable for investors as lower yields can drive less return for them. In such a case the risk appetite among investors goes up, making assets like Bitcoin more likable.
In the backdrop of slow rate cuts, the entire crypto market might be highly rangebound and volatile in the last quarter of 2024. The market, which is already undergoing a volatile phase due to ongoing geo-political tensions, will have to find positive cues going forward to get a boost in its trajectory.