US CPI meets expectations, rising 0.2% in October

SUMMARY

S. October CPI data met expectations, with the core CPI rising 0.3%.
Bitcoin surpassed $89,000 following the release of the data.
The likelihood of a Fed rate cut in December increased to 69% after the announcement.

U.S. inflation data for October met forecasts, fueling Bitcoin’s momentum. The Consumer Price Index (CPI) increased 0.2% month-over-month, matching both September’s rise and market expectations. On an annual basis, CPI climbed 2.6%, up from 2.4% in September, aligning with projections. Core CPI, which excludes volatile food and energy costs, also rose 0.3%, consistent with forecasts and past monthly trends, bringing its year-over-year increase to 3.3%.

Bitcoin reacted positively to the data, surging to $89,500 and maintaining nearly a 30% gain for the week. This comes amid favorable monetary conditions and a market uplift following President-elect Donald Trump’s pro-crypto election victory. Since September, the U.S. Federal Reserve has reduced the federal funds rate by 75 basis points as part of its easing cycle, bolstering risk assets like Bitcoin. The combination of lower interest rates and Trump’s victory has been seen as a catalyst for Bitcoin’s all-time highs.

Market sentiment for more policy easing was strengthened by the new inflation data. Following the announcement, the probability of another 25 basis point rate decline in December rose from less than 60% to 69%, according to CME FedWatch data. Many believe that the Fed’s extended support could sustain Bitcoin’s upward momentum, given that current advances are being supported by broader easing measures throughout Western central banks.

Analysts advise caution despite these strong indications because markets are still watching for impending economic data and changes to central bank policy. Although favorable financial conditions have propelled Bitcoin’s ascent, changes in economic expectations have the potential to revive turbulence. The cryptocurrency’s ability to withstand softening measures highlights its importance as a crucial component of diversified investment plans. Investors continue to monitor Bitcoin’s progress toward the $90,000 barrier, anticipating that supportive policies and controlled inflation may provide the necessary push.