The U.S. Bureau of Labor Statistics (BLS) posted the latest consumer price index (CPI) data for March 2023 a few hours ago, but bitcoin (BTC) prices are still low and stuck around $30,000.
The U.S. inflation rate is going down.
According to the BLS, the CPI for March was 0.1%. This is less than the 0.4% reading for February but less than what experts had predicted, which was 0.2%. The year-to-date inflation rate was 4.98%, which was 1% less than in February when it was 6.04%. Still, this was less than what economists had expected, 5.3%.
Notably, the general direction of inflation in the U.S. is going down. In March 2022, it was 8.54%, which is now decreasing. Inflation reached its highest point of 9% in June 2022. As the Federal Reserve (Fed) tightened in the following months, it slowly went down.
The Fed keeps a close eye on inflation because it is important. It is one of the things that the bank, which is in charge of setting monetary policy in the U.S., looks at when setting the fund rates. Since it is the Fed’s job to improve its people’s economic and social well-being, interest rates are sometimes changed, and inflation is always taken into account.
For example, Jerome Powell, the chairman of the Fed, started raising interest rates last year to stop rising inflation. This came after months of a loose monetary policy in which the central bank cut interest rates to record lows to boost the economy and protect people from the effects of the COVID-19 pandemic in the middle of 2020.
As of March 22, 2023, the Fed raised rates by 25 basis points, putting them in the 4.75–5% range. Even though the Fed says its choices about interest rates are based on data, this move was made because inflation was going down.
Bitcoin prices are at their highest point in 10 months.
As of April 12, the price of Bitcoin has stayed the same and has gone down from the symbolic $30,000 mark.
Proponents say that Bitcoin is a source of value in times of rising inflation and economic turmoil, but the asset has been under much pressure since last year when inflation was at record highs. Since inflation is going down, BTC prices look good. They recently closed above $30,000 and are moving to the highest level they’ve been at in the last ten months.
Analysts think the Fed will stop raising rates in the coming months because U.S. banks are so weak. With rates increasing and bond prices decreasing, some banks are in a tough spot.
In March, Silicon Valley Bank (SVB), a bank that likes cryptocurrencies, had a bank run because it couldn’t get money. There were worries about how much SVB had to do with government loans. After a few days, BTC prices increased because investors feared the worst. After all, the Fed was tightening.