US Annual CPI Declines To 3.1%! Bitcoin Price Rebounds From $40K Low

The crypto market recently received a bullish news as the United States reports a significant decline in its annual Consumer Price Index (CPI) to 3.1%. This news has rebounded the price of Bitcoin, rising from a concerning low of $40,000. With annual CPI now declining to the 2% target, there’s a hope for crypto investors to start 2024 on a bullish note.

November CPI Comes At 3.1% Yearly

In November, US inflation saw a slight decrease, strengthening the Federal Reserve’s determination to maintain interest rates steady into the spring season. The main consumer price index (CPI) recorded a 3.1% increase, a slight dip from October’s 3.2%. Meanwhile, the core index, excluding energy and food prices and often regarded as a key indicator of long-term inflation trends, stayed consistent at 4%.

The Bureau of Labor Statistics’ latest figures were released just one day before the Federal Reserve’s decision on interest rates. Federal Reserve policymakers tend to focus on the Personal Consumption Expenditures (PCE) index, a less volatile measure of inflation, aiming for it to return to their 2% target. They are also looking for signs of moderation in service sector inflation, excluding rent hikes.

However, with this month’s CPI data released over two weeks before the PCE figures, it may impact Federal Reserve Chair Jay Powell’s stance on adjusting market anticipations for potential rate cuts, which could be anticipated as early as March.

Stocks are showing a slight increase in anticipation of the upcoming consumer inflation report, building on Monday’s gains and buoyed by a decrease in Treasury yields. S&P 500 futures, which enable investors to watch market movements before the official trading start, have climbed by 0.2 percent just before the data is released.

Bitcoin Price Gains Momentum From $40K

After the announcement, Bitcoin’s price experienced a robust recovery from its low of $40,000. Reacting to worldwide economic shifts, Bitcoin now sets its sights on surpassing the $45,000 threshold, currently trading at $41.9K.

With inflation on the downtrend, there could be increased anticipation for a reduction in interest rates. This development might result in an uptick in the crypto market, as investors potentially seek out higher yields in more speculative assets like digital currencies

Today’s inflation figures are not expected to significantly alter the position of market participants regarding the likelihood of the U.S. Federal Reserve maintaining its current position in its upcoming two policy meetings. It’s widely anticipated that the Fed will keep its benchmark federal funds rate steady in the range of 5.25% to 5.5%. 

Bitcoin, after experiencing a significant two-week rally that increased its value by nearly 20%, has recently seen its upward momentum pause, stabilizing around the $41,000 level for the last few days.