Bitcoin Hits $17,700 as November CPI Data Shows Cool Down in Inflation

December 19, 2022 08:05:00

Bitcoin prices increased by more than 5% on Dec. 13, 2022, after the Bureau of Labor Statistics reported that the Consumer Price Index (CPI) was up by 0.1%. November’s CPI reading was 7.1%, implying that inflation will remain moderate despite soaring interest rates from the Federal Reserve System.

The CPI announcement sparked excitement in the crypto market, but the excitement faded later in the day as investors realized that inflation is still three times above the Fed’s 2% target. Crypto traders have been closely monitoring the monthly inflation report for clues on whether the Fed’s tightening of monetary policy this year will help slow the rate of consumer price increases.

The majority of altcoins rose after the CPI data was released as investors regained their appetite for risk and reentered the market.The day’s top gainers included MXC, Siacoin and Toncoin, which reported 12.25%, 19.6% and 12.04% increases respectively. Consequently, the S&P 500 closed 0.73% higher, while the NASDAQ and Dow were up 1.01% and 0.03% respectively.

Bitcoin, the largest cryptocurrency by market value, rose immediately after the report was released, by 1.6% from $16,979 to around $18,200 before stabilizing at $17,760. Its value has been declining since the collapse of FTX, once one of the world’s largest crypto exchanges. According to Jim Wyckoff, Kitco’s senior market analyst, the spike pushed BTC to a month’s cumulative high and signals that its price will rise further in the near future.

Arcane Research analysts predicted that the next Federal Open Market Committee meeting would probably cause a major market reaction. The analysts had previously warned that crypto markets would likely experience volatility due to the expected significant economic events this week. They also noted that Fed Chair Jerome Powell’s hints about projected interest rate peaks for next year will almost certainly contribute to a more volatile economic environment.

Additionally, the expected spike in interest rates by the Bank of England and the European Central Bank this week may influence Bitcoin prices as it directly affects dollar strength.

In a tweet, founder of Eight Global Michaël van de Poppe speculated on what Bitcoin’s price might look like if the Fed Reserve’s actions match investor expectations. He stated that support levels will be between $17,100 and $17,200, while resistance levels are expected between $17.8K and $18.2K. However, a number of veteran crypto traders warn that further declines are possible.

As cryptos climb, they are likely to have a favorable effect on other industry players such as Marathon Digital Holdings Inc. (NASDAQ: MARA) as they execute their growth and expansion plans.

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