Bitcoin Holds Steady at $26K as It Shrugs Off Inflation Data

Inflation ticks up in August, but core inflation shows signs of cooling. Bitcoin was little-changed after inflation data release.

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  • Inflation has risen in August, but core inflation has slowed.
  • Bitcoin has been little changed since the inflation data was released.
  • The Fed has closely monitored inflation and signaled a likely interest rate hike in the coming months.

The price of Bitcoin was little changed at $26,100 in the minutes following the release of the inflation data. Analysts had expected bitcoin to fall if inflation data came in higher than expected, as this would have increased the likelihood of the Federal Reserve raising interest rates more aggressively. 

Inflation Data Eases Concerns as CPI Matches Expectations

However, the fact that inflation data aligned with expectations appears to have allayed some of these concerns. The Consumer Price Index (CPI) rose 0.6% in August, in line with expectations, following a 0.2% increase in July. On a year-over-year basis, CPI inflation rose to 3.7%, against the forecast of 3.6% and up from 3.2% in July.

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The core CPI, which excludes food and energy prices, rose 0.3% in August, also in line with expectations, after a 0.2% increase in July. On a year-over-year basis, core CPI inflation fell to 4.3%, down from 4.7% in July.

Higher prices for food, shelter, and transportation drove the increase in headline CPI. Food prices rose 0.8% in August, the largest increase since February. Accommodation prices rose 0.5%, and transportation prices rose 0.4%.

The slowdown in core inflation was due to a decline in gasoline and other energy products prices. Gasoline prices fell 0.8% in August, the first decline since February.

The Federal Reserve closely monitors inflation and has signaled that it will likely raise interest rates in the coming months to cool the economy and bring inflation under control.

On the Flipside

  • Bitcoin’s price stability following the inflation data release does not indicate immunity to economic events.
  • Higher interest rates make it more expensive to borrow money, which could discourage investors from taking on risky assets like Bitcoin.

Why This Matters

The rise in inflation is a major concern for the cryptocurrency market. If inflation continues to rise, the Federal Reserve may be forced to raise interest rates, making borrowing money and investing in cryptocurrencies more expensive. Additionally, high inflation can lead to economic uncertainty, dampening demand for cryptocurrencies.

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To learn more about how short bitcoin funds are favored as the Grayscale ETF hype fades, read here:
Short Bitcoin Funds Favored as Grayscale ETF Hype Fades

To learn more about how XRP scams are multiplying despite Musk’s efforts, read here:
XRP Scams Multiply Despite Elon Musk’s Anti-Fraud Efforts

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.