Bitcoin and Ethereum Get a Boost as CPI Shows Inflation Cooling
Crypto and stocks rallied on Thursday after October’s CPI report indicated that U.S. inflation may finally be starting to cool off.
The latest report from the Bureau of Labor Statistics found that the consumer price index rose by 7.7% over the past 12 months. While well above the Federal Reserve’s 2% inflation target, its a step in the right direction from September’s 8.2% number.
Following the report’s release, the price of Bitcoin increased by roughly 6% from $16,500 to $17,500. Ethereum, the second largest crypto asset by market cap, had a more considerable jump, rallying from roughly $1,200 to $1,273 in mere moments and now trading for $1,330. That's a 13% increase in the last 24 hours for ETH.
The bullish print marks some much needed relief for markets, which have been slammed in 2022 amid historically fast-paced monetary tightening from the Federal Reserve. The central bank’s chairman Jerome Powell has repeatedly emphasized his intention to continue raising rates until US inflation—which has marked multiple 40-year highs this year—is reigned in.
Though some have likened Bitcoin and other scarce cryptos to inflation hedges, the digital asset market has been strongly correlated to stocks over the last two years. The S&P 500 also rose by 4% on Thursday while the Nasdaq pumped by 5%.
Though Bitcoin showed relative stability and positive performance against stocks in Q3, the entire crypto market marked new yearly lows this week amid the ongoing collapse of industry giant FTX, the crypto exchange founded by Sam Bankman-Fried.
FTX's token, FTT, has continued its descent today, down 2.2%, after falling by more than 90% over the last week.
Other altcoins also experienced a boost today. Polygon (MATIC) is up over 24% in the past 24 hours while XRP and Dogecoin have increased in price by over 8%.
Solana has also rebounded. SOL is up 13% after taking extra damage this week amid FTX’s liquidity crisis. Solana has strong connections to FTX and Bankman-Fried, who had made several investments in the blockchain network through his trading desk Alameda Research.Source