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Bitcoin and Altcoins Rise as US Consumer Price Index Remains Stable in May
Core CPI, excluding food and energy prices, also fell to 0.2% in May from 0.3% in April, with annual figures falling to 3.4% from 3.6%.
The US consumer price index (CPI) for May remained unchanged, contrary to economists’ forecasts of an increase of 0.1%. This marks a decline from the 0.3% increase recorded in April. Year over year, the CPI increased by 3.3%slightly lower than expected 3.4%.
Likewise, the core consumer price index, which excludes food and energy price volatility, fell to 0.2% in May from 0.3% in April. On a yearly basis, the Core CPI fell to 3.4% from 3.6% in the previous month. These data indicate a significant cooling of inflation, which has generated optimism in financial markets.
The upcoming meeting of the US Federal Reserve later today will be crucial, as it will decide whether to maintain or reduce current interest rates. At the start of the year, market expectations were for multiple rate cuts in 2024. However, these expectations have changed, with the first cut now expected in September, according to the report. FedWatch tool for ECM.
The unexpected CPI data had a positive impact on market sentiment. Following the strong US employment data released last week, investors’ risk appetite has increased.
Rise of the Bitcoin and cryptocurrency market
The cryptocurrency market reacted quickly to the CPI announcement. Prior to the release, Bitcoin had fallen to $66,000, with investors withdrawing $200 million from ETFs in anticipation of the CPI announcement and subsequent Federal Open Market Committee (FOMC) meeting.
However, the release of the CPI data spurred a rapid recovery in the price of Bitcoin. Within a few minutes, Bitcoin rose above $69,000marking a significant rebound from the previous low.
Additionally, Bitcoin Futures Open Interest increased by 2.29% to 523,38,000 BTC or $36.37 billion, according to CoinGlass data.
The positive sentiment has extended beyond Bitcoin, with altcoins seeing notable rallies. The price of Ethereum increased by almost 3%, reaching $3,635, while Solana recorded an increase of around 5%, trading at $160.
The CPI data also led to gains of 6% and 4% for major memecoins such as DOGE and SHIBA.