Aaryamann Shrivastava
FXStreet
- US headline Consumer Price Index (CPI) rose by 3.7% on a yearly basis in August, exceeding expectations.
- Core CPI annual inflation came in at 4.3%, in line with forecasts
- Bitcoin price hovers above $26,000, with most of the crypto market noting a minor decline.
United States Consumer Price Index (CPI) data was released by the US Bureau of Labor Statistics (BLS). While the market was expecting an increase in inflation on a yearly basis, it was taken by surprise as the actual CPI rate exceeded the forecasts. Bitcoin price noted a slightly bearish initial response, as did most of the top altcoins.
Read more - Breaking: US CPI inflation rose to 3.7% in August vs. 3.6% anticipated
US CPI exceeds expectations
The headline inflation measured by the CPI came in at 3.7% against the predicted 3.6% year-on-year, rising from July’s 3.2% rate. Core CPI annual inflation – which excludes food and energy prices – took a downturn to 4.3%, in line with forecasts, against 4.7% in July.
The larger-than-expected rebound in prices leaves room for a hawkish message from the Federal Reserve, according to FXStreet analyst Matias Salord. This could potentially impact the decision-making of the Federal Open Market Committee (FOMC) meeting scheduled next week. Higher interest rates could be on the cards, although hikes might not take place soon.
Bitcoin price stands mostly unaffected
Bitcoin price, at the time of writing, continued to hover above $26,000. The initial reaction was expected to be bearish since higher inflation usually translates to lower demand for riskier assets. This would impact BTC negatively, potentially pushing it below $26,000.
BTC/USD 1-day chart
However, the initial reaction was rather neutral, with slight bearishness in the past hour. Altcoins showed a similar reaction, as most of the declines remained within the 1% mark. Of the topmost alts, only Polygon’s native token MATIC observed the largest change, declining by 0.73% to trade at $0.5115.
Going forward, if the skepticism of the market rises, Bitcoin price is expected to take a downturn, potentially falling below $24,578 and even declining to $21,468. However, if the market surprises and continues its streak of green candlesticks to breach $26,430, BTC could initiate a recovery rally and invalidate the bearish thesis.
Read more - Bitcoin price climbing above $26,000 brings profit to BTC-related stocks
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