Bitcoin soared to a new high of $92,000 after the US Consumer Price Index (CPI) indicated a year-over-year inflation rate of 2.6% in October, an increase from 2.4% in September. This has sparked concerns regarding the Federal Reserve’s monetary policy and its potential to introduce volatility in the cryptocurrency market.
The surge in Bitcoin's value is attributed to a positive sentiment in the crypto market following the US election, which is expected to bring significant regulatory changes to the US financial system. Despite expectations of higher inflation, the CPI data was lower than anticipated.
The Labor Department reported that the CPI inflation rate remained at 0.2% monthly, mirroring the previous month, while the annual rate saw its first rise in eight months. Core CPI, excluding food and energy, held steady at 0.3% monthly, and 3.3% annually, aligning with forecasts.
Even with Bitcoin’s current uptrend, a robust approach by the Federal Reserve could introduce market volatility. Although inflation fears typically drive investors towards limited supply assets like Bitcoin, higher CPI figures could signify tighter monetary conditions and economic uncertainty.
The optimism surrounding Bitcoin's all-time high reflects the growing institutional adoption and positive sentiment surrounding cryptocurrencies, which persists amidst inflationary pressures. This resilience is attributed to its potential as a hedge against inflation and its long-term prospects.
Earlier, Bitcoin’s stability in August and September, amid inflation fluctuations, highlighted its sensitivity to macroeconomic cues, especially concerning the Federal Reserve’s policy. The market had largely anticipated and absorbed inflation trends, maintaining Bitcoin prices over $61,000 even amidst slight inflation upticks.
