Bitcoin pops as US inflation comes in below estimates
Quick Take
- Inflation rose 0.4% month-on-month in April and is up 4.9% year-on-year.
- Bitcoin gained after the release, breaking past $28,000.
Bitcoin gained on Wednesday after U.S. inflation data for April came in below estimates. Prices rose 0.4% month-on-month and 4.9% year-on-year, with the annual rate slightly below consensus estimates of 5%.
Core inflation, which excludes food and energy, rose 5.5% over the year — slightly below Nomura estimates of 5.6%.
The leading cryptocurrency by market cap was trading around $28,100 by 8:50 a.m. ET, up over 1% since the data release, according to TradingView data. Ether was also buoyed by the figures and jumped on the news, trading around $1,800.
BTCUSD chart by TradingView
RELATED INDICES
Market encouraged by inflation data
While the market has taken encouragement from the figures, inflation has now been above the U.S. Federal Reserve's 2% target for 24 months, Trakx's Ryan Shea told The Block ahead of the report, noting that it will weigh heavy on the Fed as it considers any potential rate cuts.
"To cut interest rates given such a sustained overshoot without jeopardizing their hard-earned inflation-fighting credibility, U.S. central bankers require a robust and convincing reason to justify why they expect inflation pressures to subside," Shea said.
A credit crunch would provide this rationale, he added, but it is "difficult for them to use this argument when they are on record describing the U.S. banking system as “sound and resilient."
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