Although most experts anticipated slightly lower US Consumer Price Index numbers for June due to the ongoing ceasefire at the time in the Middle East, the actual data is more promising, showing an even larger decline.
The month-over-month drop is 0.4%, which breaks a three-month streak of consistent increases. BTC’s price reacted with an immediate surge of almost a grand that pushed it to $63,500 briefly.
However, a closer look at the data tells a different story. A large portion of the CPI decline from May’s multi-year record was due to the drop in oil prices in June because of the ceasefire signed between the US and Iran.
The Core CPI, which strips out more volatile sectors such as energy and food, remains unchanged. Furthermore, the ceasefire between the two warring nations ended last week, and the tension has substantially escalated. Oil prices have jumped once again, meaning the July data is likely to surge.
According to a recent analysis, BTC traders are closely monitoring the situation as it could provide a glimpse into the upcoming FOMC meeting, in which the Fed could hike the rates.
Analysts predicted that a reading above 4% YoY could lead to further tightening of monetary policy, impacting BTC negatively. However, the actual 3.5% figure might have the opposite effect.
Bitcoin’s initial reaction was quite positive, as the asset jumped to a daily peak of $63,600 before it retraced slightly. More volatility is expected as the news unfolds and the market prices in the next FOMC meeting.
Source: CryptoPotato
