After CPI reading, Bitcoin price climbs past $25,000

From 6.4% in February 2023, the Consumer Price Index decreased to 6.0% year over year. It is anticipated that following the next FOMC meeting, interest rates will rise by 25 basis points. The cryptocurrency market responded favourably to the inflation rate as the price of Bitcoin increased to trade at $25,557.

The CPI figure decreased to 6.0% on an annual basis. According to projections, the CPI increased by 0.4% on a monthly basis. According to data released on Tuesday by the US Bureau of Labor Statistics, the core CPI—a gauge of inflation that excludes the volatile prices of food and energy—rose by 0.5% on a monthly basis, lowering the annual rate to 5.5% from 5.6%.

The CPI for the month was in line with expectations, and the Federal Reserve is expected to remain dedicated to lowering inflation down to its target of 2.0% as a result. As for what the Federal Open Market Committee (FOMC) can be anticipated to do in the future, market indicators point to a 25 basis points (bps) raise as still being possible.

A 50-bps increase is still something that some investors are open to. This is consistent with what Federal Reserve Chair Jerome Powell indicated in his speech before Congress on Tuesday:

The most recent economic figures have exceeded expectations, which indicates that the final level of interest rates is probably going to be higher than initially predicted.

Yet, some analysts are claiming that the current bank crisis, which led to the closure of Silicon Valley Bank and Signature Bank, could prevent the FOMC from considerably hiking interest rates during the upcoming meeting from March 21–22 and fulfil traders’ expectations of a 25 bps hike.

The Core Consumer Price Index in the US stayed stable in February, coming in at 0.5% on a monthly basis and exceeding the market expectation of 0.4%, according to data released on Tuesday. Risk-sensitive assets continue to be robust even if this news reignited expectations for a 25 basis point Federal Reserve rate hike at the forthcoming meeting and gave the US Dollar a boost initially.

A risk rally appears to be being fueled by easing concerns that the failure of Silicon Valley Bank would escalate into a crisis that will affect larger financial institutions.

The cryptocurrency market responded favourably to the drop in inflation to 6.0%, with the price of Bitcoin increasing to trade at $26,382. Investors had anticipated that the CPI would decrease by 0.4% MoM, as seen by their rapid response to the CPI report. Since the US Dollar, the reserve currency used to price Bitcoin, tends to decline, lower inflation is good for BTC.