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Bitcoin sinks in reaction to US Consumer Price Index hitting 40-year high at 8.6%

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The price of Bitcoin (BTC) fell after the latest release of the US Consumer Price Index (CPI), which showed that the index reached 8.6% — the highest level in 40 years.

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Economists had expected CPI to remain unchanged at 8.3%, the same as in April. However, a statement from the Labor Department on June 10 put an end to any notion that inflation was under control.

USA…CPI

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Data from the US Bureau of Labor Statistics showed that US consumer prices have risen since October 2021. An 8.5% peak in March 2022 was followed by a 0.2% drop the following month, leading some analysts to call it a peak inflation.

US consumer price inflation
Source: TradingEconomy.com
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talking to Forbes Lindsey Bell, chief market and money market specialist at Ally Financial, said in May that “green shoots” in the data could indicate that inflation had peaked.

However, data released by the US Department of Labor on June 10 shows that the CPI for May was 8.6%, surpassing the previous peak in March. This is the highest level in the last 40 years, which refutes any talk that inflation has overcome the mark.

Consumer price index
Source: wsj.com

Bitcoin falls due to rising consumer price index

BTC price reacted to the news with a 2% drop on the 5-minute candle at 13:30 GMT, bottoming at $29,470. The ensuing bull fight peaked at $29,835 before the bears took control and caused a cascade of lower majority lows.

The 1425 GMT candle has since dropped below the initial local bottom to close at $29,400. The next significant support line is at $29,200.

Bitcoin 5 minute chart
Source: BTCUSD on TradingView.com

Meanwhile, the Nasdaq, which currently has the highest correlation with Bitcoin, fared better. It opened at 11,544, rising 10 pips to a peak of 11,554. Since then, a drop of less than 1% hit a local bottom at 11,482 before turning into an uptrend.

Nasdaq 1 day
Source: nasdaq.com

According to the Financial Times reportUS Treasury Secretary Yellen said fighting inflation remains a top priority for the White House. Undoubtedly, higher-than-expected CPI data is putting more pressure on the Fed to increase rates in the near future.

As a result, the outlook for Bitcoin is grim.





Credit : cryptoslate.com

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