Bitcoin Surges to $98,500 After December CPI Data Release
Bitcoin rose sharply to $98,500, following mixed signals from the December Consumer Price Index, with the headline CPI increasing by 0.4%. The core CPI saw a surprising drop to 3.2%, prompting positive reactions in traditional markets as they adjusted to inflation news. Despite Bitcoin’s rise, traders are cautious due to the Federal Reserve’s comments on inflation rates.
Bitcoin (BTC) experienced a significant increase, jumping $1,500 to reach $98,500—an approximate 2% rise within a 24-hour period, as reported by CoinDesk. This surge followed the release of the Consumer Price Index (CPI) for December, which presented mixed signals regarding inflation. Notably, the headline CPI escalated by 0.4% month-over-month, slightly surpassing November’s 0.3%, while exhibiting an annual growth of 2.9%, consistent with analysts’ forecasts.
The core CPI, which excludes fluctuations in food and energy prices, saw a modest increase of 0.2% month-on-month, aligning with expectations. Economists favor utilizing the core CPI as a more accurate measure of underlying inflation trends relative to the overall CPI, which tends to reflect more volatility. Interestingly, the annual core CPI rate decreased unexpectedly to 3.2%, falling below the anticipated 3.3% and matching November’s figure.
The Federal Reserve remains vigilant concerning the persistently high core inflation, despite a reduction in headline inflation. Bitcoin’s performance, primarily hovering below the $100,000 mark throughout January, capitalized on the favorable inflation news, moving toward this significant psychological threshold. Traditional markets reacted positively to the data, with U.S. stock index futures increasing by 0.5% and corresponding declines in bond yields and the dollar.
Earlier in the week, Bitcoin rebounded to $97,000 following a lower-than-expected Producer Price Index (PPI) report. However, cautious sentiments persist among market participants, largely due to hawkish remarks from Federal Reserve Chair Jerome Powell and robust economic data, which have tempered anticipations for potential interest rate cuts in 2025.
Bitcoin, a cryptocurrency known for its volatility, often reacts significantly to economic indicators such as the Consumer Price Index (CPI), which measures inflation. The December CPI report highlighted contrasting trends between headline and core inflation, influencing investor sentiment and market movement. The Federal Reserve’s stance on inflation greatly impacts cryptocurrency values, making economic releases crucial for traders.
Bitcoin’s recent surge to nearly $100,000 can be attributed to the mixed signals from the latest CPI data, alongside positive reactions from traditional markets. While the headline CPI reflected anticipated growth, the unexpected decline in core inflation raised critical concerns for the Federal Reserve. As investors remain cautious amid economic indicators, the cryptocurrency market seems poised for fluctuating outcomes going forward.
Original Source: www.cnbctv18.com
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