Bitcoin's price declines after US inflation data comes in as forecast

Quick Take

  • The world’s largest digital asset by market capitalization fell as U.S. inflation data met estimates.

Bears triumphed in bitcoin markets on Thursday, keeping the digital asset from climbing back above $30,000 as U.S. CPI data came in with forecasts. Goldman Sachs analysts had predicted a cooler than expected reading. 

"The CPI came bang on in-line with pre-print predictions, though if it had come in significantly lower it would likely have benefited bitcoin," Genesis trading head Gordon Grant told The Block.

"Bitcoin has become a macro asset, and this is how we see it in terms of client flows," he continued. "Its movements are now somewhat predicated on macro-economic events such as inflation, growth, and correlations with risk assets like tech stocks or gold. By contrast, newer institutional clients appear less interested, on the margin, in idiosyncratic effects such as on-chain developments."

Bears took charge in bitcoin markets

The world's largest digital asset was changing hands for $29,457 at 11:30 a.m. ET, down 1% over the past 24 hours, according to CoinGecko.

The U.S. Bureau of Labor Statistics reported that inflation, as measured by the change in the Consumer Price Index, rose to 3.2% on a yearly basis in July from 3% in June. Core CPI inflation, which excludes volatile food and energy prices, came in lower at 4.7% in July from 4.8% in June. 

Some analysts are betting Thursday's reading could cause the Federal Reserve to pause rate hikes, though there are factors influencing the inflation rate beyond monetary policy. Natural gas, gasoline and crude oil costs have risen this month, which adds price pressure across all supply chains.

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