Bitcoin (BTC) and Ethereum (ETH) prices skyrocketed after the US Bureau of Labor Statistics released consumer price index (CPI) data for November. US CPI is down from 7.7% in October to 7.1%. Expected CPI data for November was 7.3%.
The price of Bitcoin (BTC) rose more than 3% after the inflation data. In the past 24 hours, BTC price is now up 6% from a low of $16,944, reaching a high of $17,905. The trading volume is up by more than 25%, indicating participation from traders.
Ethereum (ETH) price also rose more than 3% after the CPI release, with the current price trading at $1,336. The 24-hour low and high are at $1,246 and $1,338 respectively, indicating a rally of more than 7%. Trading volume is up 35% in the last 24 hours.
US CPI inflation for November comes in at 7.1%
The US Bureau of Labor Statistics on December 13 released November CPI data of 7.1% against market expectations of 7.3%. The Core CPI comes in at 6.0% against the expected 6.1% in November, down from 6.3% in October.
The energy index increased by 13.1% and the food index increased by 10.6%, all of these increases were smaller than for the period ending in October. Compared to the previous month, however, the CPI rose only 0.1%, less than forecasts of 0.3%.
Wall Street also expected CPI data to come out lower as inflation cools. US stocks rose on Monday, with investors expecting softer inflation and a smaller rate hike from the Federal Reserve this week. Dow Jones futures are up 2.5% on Tuesday and S&P 500 and Nasdaq futures are up nearly 2.8% and 3.5%.
JPMorgan predicts a 10% stock rally if the US CPI comes out at 6.9% or lower. However, JPMorgan expected a CPI reading of 7.2%. While the US stock market has shown less correlation with the crypto market in recent times, the lower CPI also helped Bitcoin and Ethereum price rise.
Popular analysts Michael van de Poppe and “Wolf of Wall Street” Jordan Belfort predicted Bitcoin and Ethereum prices could rise by Christmas, with the US CPI and Fed rate hike being the crucial factors signaling the bottom of the crypto market.
Bitcoin Price Increases More With Dovish Fed
November’s fall in CPI will affect the Federal Reserve’s decision to raise interest rates the following day. Fed Chair Jerome Powell previously pointed to a slowdown in the pace of interest rate hikes in December and the coming months.
According to the CME FedWatch Tool, the probability of a 50 basis point rate hike before the CPI number was 72.3%. Following the CPI data, the probability of a 50 basis point rate hike increased by more than 80%.
The US Dollar Index fell 1.30% to 103.70 following the CPI data. So, investors can expect an increase in Bitcoin and Ethereum prices in the coming weeks.
Also Read: Bitcoin and Ethereum Price Breaks Higher, Wall Street on US CPI
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About the author
Varinder is a technical writer and editor, technology enthusiast and analytical thinker. Fascinated by disruptive technologies, he has shared his knowledge about Blockchain, Cryptocurrencies, Artificial Intelligence and the Internet of Things. He has been associated with the blockchain and cryptocurrency industry for quite some time and is currently covering all the latest updates and developments in the crypto industry.
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