After the extremely volatile period, in which the bitcoin price has rocketed amid the current banking crisis, today the consumer price index (CPI) was published in the United States.
US CPI
The annual inflation in the US came out at 6.0%: exactly in line with expectations. Last month you could read in the Bitcoin news that annual inflation was still 6.4%.
The CPI measures the average change in the prices consumers pay for a basket of goods and services. It is calculated by the Bureau of Labor Statistics and is used as an indicator of inflation.
Core inflation (Core CPI) – which excludes food and energy costs – rose more than forecast to 0.5% in February from 0.4% in January. An increase of 0.4% was expected. It core percentage on an annual basis was 5.5% as expected, compared to 5.6% in January.
Bitcoin price skyrockets
Bitcoin (BTC) reacted quite quickly to the release of the inflation figures. Bitcoin price managed to cross both $25,000 and $26,000, putting it in the green by more than 16% over the past 24 hours. The last time bitcoin was above $26,000 was already 9 months ago. At the time of writing, bitcoin is trading just under $26,000.
Inflation concerns have receded in recent days as investors, the government and the Federal Reserve have dealt with the potential implications of multiple bank failures. For example, you could read in the crypto news that Silvergate, Silicon Valley Bank (SVB) and Signature Bank had gone under.
A few days ago, most markets were still expecting a rate hike of 0.5% at next week’s Federal Open Market Committee (FOMC) meeting. However, the banking crisis has led the majority to expect an increase of 0.25%. A large part also thinks that interest rate hikes will be put on hold.