See More

Bitcoin and Ethereum Hit Monthly High Following Low Inflation Figures

2 mins
Updated by Ryan James
Join our Trading Community on Telegram

In Brief

  • The latest inflation figures have come in under expectations, triggering a boost in financial markets.
  • Crypto markets spiked, as Bitcoin jumped 2.75% and Ethereum 3.76% within 30 minutes of the announcement.
  • Most believe this will enable the Fed to pursue an easing of its policy of monetary tightening to combat inflation.
  • promo

Investors celebrated the latest inflation report from the United States, which came in below market expectations.

The consumer price index (CPI) rose 0.1% in November, according to the U.S. Bureau of Labor Statistics. This was lower than the 0.3% figure expected by economists, and the 0.4% increase recorded in October. Meanwhile, CPI rose 7.1% year-on-year, versus an estimate of 7.3%, and down from 7.5% in October.

Market reactions

Markets reacted jubilantly to the prospect that inflation could finally be weakening its hold on the economy. The 10-year Treasury bond yield fell below 3.5% after the results were released, while U.S. stocks futures soared. For instance, futures tied to the S&P 500 jumped 2.8%, while futures tied to the Dow added 2.2%. Nasdaq-100 futures also rose 3.8%, which suggested a jump for tech stocks overall.

As the inflation data reflected weakening economic growth in the United States, foreign currencies managed to gain on the dollar. For example, the British pound and the Euro both achieved six-month highs against the US dollar. The euro was up 1.2% to 1.0663 against the dollar, while the sterling was 1.3% higher to 1.2432, within an hour of the inflation data. European stocks were also up, as the pan-European Stoxx 600 jumped 1.6%, as all sectors and major bourses climbed.

Source: Coin360

Cryptocurrency markets also responded enthusiastically to the news. Within 30 minutes of the release of the inflation data, Bitcoin rose some 2.75%, while Ethereum jumped 3.76%. Over the past day, total cryptocurrency market capitalization rose 3.5% to just over $900 billion.

Waiting on the Fed

Weakening inflation is a welcome economic indicator to many, as it has made this past year one of the most economically difficult for some time. Not only has rampant inflation raised the prices of most basic goods and services, but its remedy has also been painful. 

In an effort to tame persistent inflation, the U.S. Federal Reserve started aggressively pursuing monetary policy tightening. During its last three meetings, the Fed consecutively raised interest rates by 75 basis points. Now, with inflation reported as lower than expected, many feel confident the monetary authority will follow through with an easing.

During its final session of the year, economists expect the Federal Reserve to raise interest rates by just 0.5%. Similar decisions will also be made later this week by the Bank of England, the European Central Bank, and the Swiss National Bank.

Top crypto platforms in the US | March 2024
Coinbase Coinbase Explore →
AlgosOne AlgosOne Explore →
Chain GPT Chain GPT Explore →
iTrustCapital iTrustCapital Explore →

Trusted

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

photo_Nick.jpg
Nicholas Pongratz
Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.
READ FULL BIO
Sponsored
Sponsored