Bitcoin Price Rallied 12% After Last CPI Report —Will it Happen Again?

Key Insights:

• After a 3% decline on Wednesday, Bitcoin (BTC) price edged towards reclaiming the $27,000 level on October 12. 
• Thursday’s BTC price bounce came on the back of the latest Consumer Price Index data released by the US Bureau of Labor Statistics.
• Bullish readings from the CPI report triggered an upswing in Bitcoin (BTC) spot markets, but faltering trading volumes echo bearish concerns. 

After a 3% decline on Wednesday, Bitcoin (BTC) price edged towards reclaiming the $27,000 level on October 12. Historical data-driven analysis provides insights into how BTC prices could react to the latest Consumer Price Index (CPI) data released by the US Bureau of Labor Statistics.

US Inflation Cooled By 0.2% in September, According to CPI Data 

The Consumer Price Index released on October 12 shows that household inflation rose 0.4% in September, a significant 0.2% drop from the 0.6% recorded in August 2023. This decline in CPI has been received as bullish indicator by investors. 

Published monthly, the CPI data is a economic indicator used to measure the average change over time in the prices paid by urban consumers for a basket of goods and services. 

Essentially it provides valuable insights into inflation trends and ultimately, likely changes in citizens’ investment patterns in the coming months. 

Bitcoin (BTC) Price increased by 12% After the Last CPI Report 

Typically, investors in risk-on assets such as stocks and cryptocurrencies consider it bullish when US CPI indicates low or lower-than expected inflation. Less pressure on citizen’s disposable income, often means that more funds available to be invested in risk assets.

This phenomenon was last observed when the US Bureau of Labor Statistics published the previous CPI data on September 12. 

The report showed that household inflation had increased by 0.6%, lower than the 0.8% that market analyst had anticipated. Historical BTC price data shows that crypto investors reacted positively to the previous CPI report. 

 

As depicted below, BTC price stood at a H2 2023 bottom of $25,100 as of September 12. But following the CPI report release, Bitcoin price rose 12% to hit $28,050, by the end of that month. 

Notably, the latest CPI report shows that inflation is 0.2% lower than the previous month. Compared to the August 2023 report which showed a 0.4% inflation increase. Hence, this will likely trigger a much more positive response from  Bitcoin investors than last month. 

If this economic projections align with historical trends, BTC price could retest $30,000 in the coming weeks. However, the escalation tensions in the Middle East remains a vital factor to watch.