Consumer prices in the United States rose by 2.4% in September, slightly higher than market expectations, but still reflect a downward trend compared to recent years. This ongoing decrease in inflation could pave the way for more interest rate cuts, potentially benefiting Bitcoin and other cryptocurrencies.
On October 10, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) increased by 2.4% over the past year, marking its lowest annual rise since February 2021. Although this was just above the forecasted 2.3%, it remains below the previous year’s August figure of 2.5%, continuing a downward trend. Two years ago, inflation peaked at 9.1%, and the current levels show significant improvement.
According to 21Shares, a digital assets company, the easing inflation, combined with recent job market data, suggests an 80% chance of a 25 basis point interest rate cut in the upcoming Federal Reserve meeting. This outlook stems from a drop in unemployment, which fell from 4.2% to 4.1%.
Leena ElDeeb, a research analyst at 21Shares, highlighted that Bitcoin and other cryptocurrencies are highly sensitive to inflation data since it influences the Federal Reserve’s monetary policies. She explained that lower interest rates reduce borrowing costs, which can encourage investment in riskier assets like cryptocurrencies. ElDeeb also expects a market recovery after recent geopolitical tensions impacted the financial environment.
Despite these prospects, Bitcoin’s price has continued to decline, dropping 1.6% and trading at $60,604 at the time of writing. Meanwhile, economic indicators show mixed signals for the U.S. economy. The Bureau of Economic Analysis reported a strong 3% annual GDP growth for the second quarter of 2024, but jobless claims reached a 14-month high with 258,000 filings in early October.
The CME Group’s FedWatch tool indicates that the probability of a 25 basis point rate cut at the Federal Reserve’s next meeting in November has risen to 89%. This potential rate reduction could help boost investments in cryptocurrencies.
Summary Review: the recent CPI data, showing a cooling inflation trend, supports the likelihood of an interest rate cut in the coming months. This could set a favorable stage for Bitcoin and other cryptocurrencies, as lower borrowing costs tend to drive investment in riskier assets. While Bitcoin’s price has faced downward pressure in recent days, the broader economic indicators and the Federal Reserve’s next steps could play a key role in shaping market sentiment moving forward. The potential for a 25 basis point rate cut in November brings optimism for recovery in the crypto space, especially after recent geopolitical uncertainties.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
