Bitcoin Soars As US CPI Inflation Meets Wall Street Estimate At 4.2%

Bitcoin bounced back from previous losses on Wednesday following fresh U.S. inflation data that largely matched Wall Street forecasts. It helped quell concerns that the consumer prices inflation would come in hotter-than-expected and potentially shake riskier assets.

Bitcoin Makes Iconic Recovery Amid US CPI Data

BTC price chart today. Source: TradingView

Market data shows the BTC price trading at $61,783 at the time of this writing. Earlier, it briefly dipped below the $61,000 level ahead of the release. However, though Bitcoin has surged back, but it’s still 1.32% lower on the 24-hour chart.

The Consumer Price Index (CPI) rose by 0.5% in May compared with the month before, as economists had predicted, data from the U.S. Bureau of Labor Statistics revealed.

Moreover, CPI inflation advanced 4.2% year-over-year which is in line with market expectations. However, it is much higher than the 3.8% rise in April on an annual basis.

Both the traditional asset and crypto asset markets were relieved as the CPI inflation data matched Wall Street estimates. Meanwhile, the annual increase in core CPI, which strips out food and energy prices, was 0.2% in May, less than 0.3% was expected. Further, Core inflation was at 2.9% on an annual basis, on track with forecasts.

Energy Prices Remain High Amid US-Israel-Iran Conflict

On the contrary, the energy sector continued seeing inflationary pressures, per the report. Prices for energy products increased 3.9% for the month in May and 7.0% for gasoline in the month.

In addition, the energy index rose by 23.5% during the past year, while gasoline prices jumped 40.5%. Experts attribute this surge to the ongoing Middle East conflict involving US, Israel, and Iran.

Housing prices also continued to rise, rising by 0.3% in May. Shelter was responsible for over 60% of the monthly rise in prices for all items not including energy, according to the BLS. Food prices increased 0.2%, driven by a 0.1% increase in food-at-home prices and a 0.3% increase in food-away-from-home prices.

The CPI release caused an initial wave of volatility on crypto markets as traders reacted to the release’s impact on the Federal Reserve’s policy. The cooling inflation data supported analyst expectations of Bitcoin has bounced from its intraday lows to nearly $61,800 after the data came out.