Bitcoin Surpasses $69,000 Following Weak US CPI Data, Fed Rate Cut Chances Remain Slim

Bitcoin experienced a significant increase, reaching $69,000 due to favorable US Consumer Price Index (CPI) data, which indicated softer inflation than expected.

Key Highlights:

BTC price approached critical resistance as US CPI data showed cooling inflation rates.
Despite the upward movement in cryptocurrency markets, traders remain cautious about Bitcoin’s overall strength.

Bitcoin Rises on Low CPI Data

Data obtained from TradingView illustrated a rise of nearly 4% in BTC’s value at the time of this report, with BTC/USD hitting $69,190 on Bitstamp.

BTC/USD Chart BTC/USD one-hour chart. Source: Cointelegraph/TradingView

This positive turn followed a January report indicating that the US CPI results were lower than expectations, with core CPI aligning with predictions at 2.5%, while the overall figure was slightly lower at 2.4%.

US CPI Change US CPI 12-month % change. Source: BLS

In response, trading platform The Kobeissi Letter remarked on the low levels of CPI inflation observed in recent years. They stated, > “Odds of further interest rate cuts are back on the rise.”

Fed Rate Probabilities Fed target rate probabilities for March FOMC meeting (screenshot). Source: CME Group

Kobeissi highlighted the potential for the Federal Reserve to reduce interest rates in their upcoming March session. According to earlier reports, market predictions for such an event were minimal, influenced by solid labor market data. Following the CPI announcement, the likelihood of a minor 0.25% cut was below 10%, according to the CME Group FedWatch Tool.

Meanwhile, André Dragosch, the European head of research at Bitwise, suggested that when examining through the lens of an alternative inflation gauge, the CPI decline shouldn’t have come as a surprise.

“CPI inflation has plummeted sub-1% already…”

Additionally, gold markets made a play to reach the $5,000 per ounce threshold, while the US dollar index (DXY) sought to recover after an initial drop in CPI to 96.8.

Despite Bitcoin’s gains, US stocks hovered lower during this period.

Analyst Outlook for Bitcoin

Market observers were generally hesitant to adjust their perspectives regarding BTC price dynamics. As noted, this ongoing caution in sentiment comes amidst fluctuating market conditions and traders like Daan Crypto Trades voiced concerns on social media about potential BTC consolidation and resistance levels.