• The latest CPI data resulted in immediate price volatility for Bitcoin, with the inflation rate increasing by 5% in March.
• The Core CPI stood at 5.6%, while the February rate was 6%.
• After the numbers were released, Bitcoin’s price jumped almost $500 in minutes.
Bitcoin Jumps on US Inflation Data
The latest Consumer Price Index (CPI) data release for March caused an immediate spike in Bitcoin’s price. Initially expected to decline to a rate of 5.2%, the actual third-month reading showed an increase to 5%. Additionally, the core CPI – which excludes food and energy – matched expectations at 5.6%. This caused bitcoin’s price to jump $500 within minutes of the announcement.
Why is Bitcoin Reacting?
Bitcoin is viewed as a risk-on asset and its short-term performance can be closely tied to inflation rates as they determine how monetary policy will be enacted by the US Federal Reserve. A drop from 6% in February to 5% this month shows that their actions are having an effect and could lead to a reversal of strategy soon.
What Does This Mean for Investors?
The rise of bitcoin following the announcement indicates that investors see potential gains from inflationary policies such as quantitative easing from central banks like the Fed. In addition, it is likely that investors are expecting similar action from other major central banks around the world who may also respond with similar measures if inflation continues at these levels or higher.
How Will Bitcoin Perform Over Time?
It is difficult to predict how bitcoin will perform over time due to its volatile nature and unpredictable market forces affecting its value. However, this recent event shows that there could be potential gains if investors act quickly and use macroeconomic data releases like this one to inform their decisions when buying or selling cryptocurrencies such as bitcoin.
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