Crypto: reaction to the new CPI

One of the most eagerly awaited reports in crypto space is from the BLS is the Consumer Price Index (CPI), which provides valuable insight into inflation.

The Bureau of Labor Statistics (BLS) is a key institution in the US, responsible for monitoring, preparing and disseminating vital economic data. 

Yesterday, the financial markets eagerly awaited the release of the April CPI, due at 14:30. 

Today we can take a closer look at the report in relation to the forecast. 

The April CPI results

The US Bureau of Labor Statistics released the Consumer Price Index (CPI) results for April 2023, revealing important information about the state of the economy. 

The seasonally adjusted CPI for all urban consumers (CPI-U) increased 0.4 percent in April, following a 0.1 percent increase in March. Over the past 12 months, the all-items index has risen by 4.9 percent in seasonally unadjusted terms.

Among the factors contributing to the monthly increase in the all-items index, the housing index played a significant role, followed by increases in the used cars and trucks index and the petrol index. 

Although the energy index increased by 0.6% in April, the rise in the petrol index offset the falls in the other energy component indices.

The index for all items excluding food and energy also increased by 0.4% in April, mirroring the increase in March. 

There were significant increases in the indices for housing, used cars and trucks, motor insurance, recreation, household equipment and personal care.

However, the indices for air fares and new cars both fell during the month.

Looking at the 12-month changes, the index for all items increased by 4.9% in April. 

Meanwhile, the index for all items excluding food and energy increased by 5.5% over the same 12-month period. 

In contrast, the energy index fell by 5.1 per cent over the 12 months to April, while the food index rose by a significant 7.7 per cent over the past year.

The April CPI results provide a valuable insight into the current state of consumer prices in the US economy. The increase in the index for all items, along with notable contributions from housing, used cars and trucks, and gasoline, underscores the persistence of inflationary pressures. 

These results underscore the importance of monitoring price changes and their impact on various sectors, such as housing, transportation and energy. 

As the economy continues to evolve, policymakers and market participants will carefully analyse CPI data to make informed decisions on monetary and fiscal policy and investment strategies.

The April 2023 CPI results have significant implications for the world of finance and cryptocurrency. Rising consumer prices, as indicated by the CPI, can have a knock-on effect on various sectors of the economy and financial markets.

In the context of cryptocurrencies, CPI results can also influence market sentiment and investment strategies. 

Often seen as a hedge against traditional inflationary pressures, cryptocurrencies can be affected by changes in consumer prices. 

As inflation rises, investors may seek alternative assets, including cryptocurrencies, to protect their wealth. 

As a result, increased demand for cryptocurrencies could drive up their prices.

The major impact of the CPI report on crypto

The atmosphere on the stock and crypto markets is always tense until the release of the CPI. 

After partially analysing the results of the CPI released yesterday, it is important to stress the importance of the impact of this report on the cryptocurrency world.  

We all know that Bitcoin and Ethereum are currently on an upward trajectory. 

Furthermore, altcoins, which refer to cryptocurrencies that are alternatives to bitcoin, are also showing positive reactions to the CPI results. The market seems to be finding optimism in the air.

Experts had predicted an increase of 0.4% on a monthly basis (MoM) and 5% on an annual basis (YoY). The data confirm these expectations, with an increase of 0.4% on a monthly basis and a slight change of 4.9% on an annual basis. 

These figures point to a relatively stable inflation rate, in line with the experts’ forecasts.

Another important parameter to consider is the core CPI, which excludes volatile food and energy costs. The core CPI is also in line with forecasts, rising by 0.4% over two months (5.5% year-on-year). 

This measure is a more accurate reflection of underlying inflation trends as it excludes the impact of volatile sectors.

The CPI release concludes a busy period at the beginning of May, marked by major events such as the Federal Open Market Committee (FOMC) meeting and the European Central Bank (ECB) meeting.

The CPI update is the latest addition to this sequence of important economic steps that have continued to shape the financial landscape.

The focus now shifts to market reaction. In times of uncertainty, it is often wise to hold off on trading for a few hours while the market stabilises.

The CPI report is an important tool for investors, economists and policymakers as it provides crucial information on inflation trends.

It allows them to assess the overall health of the economy and make informed decisions about monetary policy and investment strategies. 

The BLS plays a key role in ensuring the accuracy and timeliness of these data, improving transparency and facilitating the functioning of financial markets.