BREAKING: What last night's CPI and FOMC means for Bitcoin
Institutional Crypto Research Written by Experts
👇1-6) The US CPI came in at 3.3%, precisely as we hoped for in last week’s report, in which we presented the chart below. A lower CPI has been bullish for Bitcoin, while a higher one has been bearish – leading to the sell-offs in January, March, and April.
Bitcoin and CPI inflation
👇2-6) This is the second consecutive decline, and we firmly believe the US inflation peaked at 3.5% in April. Eventually, the Fed and market participants will acknowledge this, which should be bullish for Bitcoin.
👇3-6) Last night's macro events played out broadly as expected, with CPI coming in a touch weaker. This led to a Bitcoin rally after the selloff following last week’s US employment data. After the marginally higher inflation prints in Q1, the FOMC was expected to adjust their dot plots higher, which the market initially interpreted as hawkish. No surprise here.
👇4-6) While the FOMC expects just one cut, the market still prices in two cuts, down from six at the beginning of the year.
👇5-6) The FOMC will likely have to lower their expectations later in the year, as we have already seen the high for this year’s inflation prints. Equity markets have had no problem adjusting rate cut expectations (from 6 to 1) and have rallied, which should also be bullish for Bitcoin.
👇6-6) Our recommendation remains unchanged: to stick with the winners (Bitcoin) and avoid others (such as Ethereum). Our previous analysis has shown that a lower CPI number tends to lift Bitcoin prices, and we anticipate this trend will continue.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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