Bitcoin Bounces Back: What You Need to Know
Inflation rates in the United States noted a decline in May, coinciding with a marginal increase in the value of Bitcoin.
Crypto enthusiasts, listen up! Bitcoin has recently seen a half-percentage point surge following the latest Consumer Price Index (CPI) report. Prices in the US have risen 2.4%, which suggests that President Trump's trade war has had minimal impact.
Now, here's where things get interesting. The predicted increase was estimated to be higher by all 73 analysts in the latest Bloomberg survey. With Bitcoin currently hovering just below $109,000, it's climbing closer to $110,000. In the past week, BTC has gained a whopping 4.4%!
Major altcoins like Ethereum and Solana are following the price pattern of Bitcoin. Ethereum and Solana have increased by 1% and 1.7%, respectively, in the past hour. They've also gained about 7% in the past week. As of now, SOL is valued at $167.09, according to CoinGecko data.
So, why the sudden rally? According to Zach Pandl, head of research at Grayscale, "crypto has so much momentum right now due to macro demand for Bitcoin and regulatory clarity for DeFi." This rally could continue whether or not the Federal Reserve decides to cut rates. Keep in mind, the lower-than-expected reading could make it more likely that the Federal Reserve considers a rate cut.
In case you weren't aware, the CPI is a crucial price measure. In May, it showed that prices had climbed 0.1%, coming in lower than most economists' forecasts, sending the annual rate to 2.4%. Core prices, which strip away more volatile food and energy costs, also rose by only 0.1% compared to the previous month.
You may be wondering, what's the deal with this CPI stuff? Well, the latest ratings come after April inflation measures arrived cooler than expected, buoying investors looking for a rate reduction. If you're still wondering about what the Fed is up to, don't worry! The Federal Reserve has said it will base any cut on data-based evidence that inflation is waning sustainably.
In layman's terms, rate cuts are typically seen as good for digital assets. Let me elaborate. After cutting the rate to a range between 4.25% and 4.50%, the Fed has left rates unchanged at its last three meetings. This, apparently, has irked U.S. President Donald Trump.
As of now, the CME FedWatch tool calculates a 99% probability that the central bank will keep the current rate unchanged. It seems unlikely that they will slash rates in July, but there's a more than 50% likelihood of a cut in September. Exciting times for crypto traders, huh?
Now, here's where things get really interesting. If you want to get a feel for the market, you should consider what Ruslan Lienkha, chief of markets at Switzerland-based crypto services firm YouHodler, had to say. "Financial markets remain optimistic," he shared. "There's a strong possibility that Bitcoin could soon reach a new all-time high."
But, here's the catch. With an upcoming economic report on US inflation, there's a risk of a reversal if the reading is higher than expected, which would lead to increased volatility in the crypto market. So, keep your eyes peeled for the report!
Stay tuned for more updates and don't forget to keep your crypto game on point!
- Bitcoin has surged by half a percentage point, approaching $110,000, following the latest Consumer Price Index (CPI) report, suggesting President Trump's trade war has had minimal impact.
- Major altcoins like Ethereum and Solana are mirroring Bitcoin's price pattern, with Ethereum and Solana increasing by 1% and 1.7%, respectively, in the past hour, and gaining approximately 7% in the past week.
- Crypto has accumulated momentum due to macro demand for Bitcoin and regulatory clarity for DeFi, reports Grayscale's head of research, Zach Pandl, indicating that this rally may persist even if the Federal Reserve chooses not to cut rates.
- The latest CPI reading came after April's inflation measures were lower than forecasted, promoting speculation for a potential rate reduction among investors.5.Rate cuts are generally considered favorable for digital assets, as the Fed has already left rates unchanged at its last three meetings, sparking controversy with U.S. President Donald Trump.
- The CME FedWatch tool estimates a 99% probability that the central bank will keep the current rate unchanged, suggesting it's unlikely for a rate cut in July, but a more than 50% likelihood exists for a cut in September.
- Financial markets remain bullish on crypto, with a possibility that Bitcoin could soon reach a new all-time high, as noted by Ruslan Lienkha, chief of markets at Switzerland-based crypto services firm YouHodler.
- However, investors should remain cautious as an upcoming economic report on US inflation could trigger volatility in the crypto market if the reading is higher than expected.
