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Impact of U.S. Inflation Data on Cryptocurrency Market

Analyzing the influence of recent U.S. inflation data on Bitcoin and cryptocurrency trends, market reactions, and future forecasts.
Published on 2024-10-10

U.S. Inflation Data and Market Reactions

The latest Consumer Price Index data revealed that U.S. inflation did not slow as much as anticipated in September. Overall inflation decreased slightly to 2.4% year-over-year, above the 2.3% economist forecast. Core inflation, excluding food and fuel, rose to 3.3%. These figures have impacted cryptocurrency markets, notably disappointing Bitcoin investors.

Cryptocurrency Market Impact

Bitcoin's price, after peaking at $61,246 during the European session, saw a minor decline of 0.2%. Ethereum experienced a sharper drop of 2.4%, with other cryptocurrencies like Polkadot also witnessing decreases. The unexpected inflation figures have led to speculation that the Federal Reserve might pause further rate cuts, strengthening the U.S. dollar and increasing risk aversion in volatile markets like cryptocurrencies.

Federal Reserve Rate Cut Speculations

The CME's FedWatch tool now suggests an 85% likelihood of a 25 basis point rate cut by the Federal Reserve at its upcoming meeting, a rise from the previous 65% probability. Earlier, there was a smaller chance of a more significant 50 basis-point cut later in the year, following the September reduction.

Bitcoin ETFs and Market Activity

Despite market fluctuations, Bitcoin ETFs remained relatively stable, with nine out of eleven funds showing no significant movement. The prior day saw substantial inflows, marking the highest since late September. Fidelity's Bitcoin Fund led with significant additions, followed by BlackRock's iShares Bitcoin Trust. Since January, Bitcoin ETFs have attracted nearly $19 billion in net inflows.

Ether ETFs and Market Stability

In contrast, Ether ETFs showed no significant activity, marking their third period of inactivity since their launch. These funds have faced net outflows of $562 million since July.

Upcoming Economic Data

Further U.S. economic data, including jobless claims, real earnings, retail sales, and the Treasury budget statement, are set to be released, potentially influencing market trends further.

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