US CPI Comes in At 2.9%, Will Bitcoin Price and Crypto Market Slump Or Surge?

The crypto community has been eagerly awaiting the US Consumer Price Index (CPI) data as it marks a major economic event to influence the market. The US CPI report for December 2024 highlights that the inflation has increased to 2.9%, marking a 0.2% rise from the 2.7% recorded in November. As a result, Bitcoin price jumped above $98.5K level as it came in line with market expectations and the core CPI inflation rose less than expected.

According to the latest report released by the US Bureau of Labor Statistics, the CPI of 2.9% indicates third consecutive increase in the index. Market estimates predicted that the CPI data would stay steady at 0.3% month-over-month. At the same time, there were estimations that the year-over-year (YoY) CPI to surge to 2.9% from last month’s 2.7%.

While the Core CPI was predicted to cool at 0.2% from the previous month’s 0.3% mark, the data showed 0.2%. The YoY Core CPI, though estimated to remain unchanged at 3.3%, fell to 3.2%.

US CPI and Federal Reserve’s Upcoming Rate Decision

As reported by CoinGape, the US CPI inflation data, PPI and jobs data could influence the Federal Reserve’s interest rate decisions in the next FOMC meeting scheduled on January 28-29. Many alerted that inflationary pressures may lessen the possibility of a further reduction in the Fed’s interest rate.

Meanwhile, the US Producer Price Index (PPI) data, released on January 24, eases the sentiment. The data revealed the inflation rate at 3.3%, lower than the expected range of 3.5%. The core PPI inflation rate also came cooler than the expected 3.8%, marking a rate of just 3.5%. An industry expert stated that the softer-than-expected inflation data from the US helped “pause the recent surge in the US Treasury bond yields and boosted investors’ appetite for riskier assets.” Though the US CPI and PPI reports signal a bearish sentiment, it needs to be seen how they would affect the global crypto market trends.

The US dollar index (DXY) fell below 109, after a two-day high above 110 causing a recovery in Bitcoin price. Also, the 10-year Treasury yield decreased by 0.11% to 4.67%.

Is a High Volatile Crypto Market Ahead?

The crypto market is still vulnerable to high volatility and inflation before and after the inauguration of the incoming President Donald Trump on January 20. Though the community remains optimistic about Trump’s possible crypto-friendly policies, its impact on the market remains speculative. Trump’s crypto-focused developments, coupled with the US CPI and PPI reports, indicate a turbulent crypto space ahead.

QCP Capital cautioned about the future volatility where both crypto and equity markets remain fragile. Warning against Bitcoin’s downward pressure, the platform stated, “We maintain cautious of the downside as the $90k level in BTC has been tested numerous times.”

However, BTC price has jumped 2% after the CPI data, with the price currently trading at $98,700. The 24-hour low and high are $95,330 and $98,650, respectively.