Bitcoin (BTC) rose slightly on Saturday when the focus was on last Tuesday’s Federal Open Market Committee (FOMC) meeting due to lower inflation values.
The BTC/USD exchange rate approached $49,000 on Coinbase and reached $48,825 before declining due to temporary pressure to make a profit. However, the rally has boosted expectations that the pair will reach $50,000, a psychological resistance target, in the upcoming sessions.
Fear of Inflation Increases Demand for Bitcoin
Bitcoin markets were boosted by concerns about continued inflation, despite the Consumer Price Index (CPI) report released on September 13.
The data showed that the US consumer price index rose 5.3% on an annual basis in August, up from 5.4% in the previous month. The market’s reaction to the numbers was ambiguous, with some cheering that core inflation was below expectations, while others noted that inflation remains at a ridiculously high level – 5.3%, one of the highest in more than a decade. for the consumer price index.
“I like to look at inflation data in the average sense (so instead of running an entire crazy category, we look at a distribution center of 82 categories, weighted evenly),” says Jens Nordwig, founder and CEO of Data Analytics. Exante Data Corporation. he added:
“In calculating the [average] [inflation], the number was not low.”
Several bullish signs for bitcoin emerged as analysts at TD Securities indicated that the Federal Reserve may delay a planned cut in asset purchases of $120 billion per month after a lower-than-expected inflation report.
Additionally, Anthony Pompliano, partner at Bomb Investments, warned that persistent 5% inflation could cause Americans to see their savings evaporate.
“The only way to protect yourself in this environment is to make sure you invest,” Pompliano wrote in a note to clients.
“The more you invest in the markets, whether it’s stocks, real estate, cryptocurrency, etc., the better off you are.”
The dollar is rising
The BTC/USD exchange rate jumped 4.85% on the day of the inflation data.
The pair rose 2.17% on Wednesday to close above $48,000. Prices started to consolidate sideways in the next two sessions, and on Saturday it continued to move towards the $49,000 mark.
Surprisingly, the US Dollar Index (DXY) has piled up in addition to Bitcoin, repeating that macro investors have moved capital into assets they saw as a safe haven following the inflation report. The index, which measures the dollar against a basket of leading foreign currencies, rose 0.41% on Friday to 93,246, the highest level in September.
Bitcoin and the US dollar are rising according to mixed inflation expectations. Source: TradingView
More signals for the bitcoin and dollar markets are expected from next week’s Federal Open Market Committee meeting.
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Federal Reserve officials agree that they will begin to unwind their loose monetary policy by the end of this year. But a report on non-farm wages released earlier this month showed that the US labor market has not fully recovered.
This will lead the Fed back to its austerity plans, and further delay could lead to a stronger Bitcoin and a weaker dollar.