NEW DELHI (CoinChapter.com) — The October 2023 US Consumer Price Index (CPI) data showed inflation remained flat compared to the data in September 2023.
The drop in CPI resulted in speculations of a more dovish policy from the US Federal Reserve in its next meeting. Per the latest figures, the CPI for all items (except food and energy) rose by 0.2% in October, compared to the 0.3% increase in September 2023.
However, the CPI data showed an increase of 3.2% year-on-year for October, despite being flat for the month. The spike is still moderate in comparison to the 3.7% annual spike in inflation in Sept. 2023 and below the estimations of most analysts.
Housing costs, like rent, contributed to the increase in prices. However, other items like used cars and airline fares got cheaper
US CPI Print Warns “Higher-For-Longer” Interest Rates
Despite the inflation cooling marginally, investors should remain prepared for a higher interest rate environment for the foreseeable future, warned Nigel Green, CEO of deVere Group.
We believe there will be a sustained period of slower progress than we’ve seen up to this point against inflation in the flight to get it back to the 2% target. The process is going to be more gradual moving forward. Therefore, we expect one more hike from the Fed next year to boost that progress a little
Nigel Green told CoinChapter in a note
Moreover, Green noted that the higher interest rate environment could benefit the financial sector as banks would likely see enhanced profit margins. The CEO of the world’s largest independent financial advisory claimed that it was a “new investment era” and investors should acclimatize accordingly.
Inflation has cooled down, but the Fed’s rate target of 2% still remains a distant dream. As such, it is likely the US central bank will continue implementing measures to control inflation.
Yet, the latest CPI data would play a crucial part in the Fed’s monetary policy decisions, which could lead to speculations of a more dovish policy.
Bitcoin Price Plummets Before Recovering
A dovish Federal Reserve usually results in market participants opting for riskier assets like cryptos. As a result, speculations of the Fed stopping rate hikes or even lowering them often serve as a bullish cue for the sector.
However, that was not the case on Nov. 14. Bitcoin (BTC), along with the wider crypto market, plunged within hours of the release of US CPI data. BTC price dropped nearly 5% to reach a daily low near $35,000 before bulls moved in to defend the 20-day EMA (red wave) dynamic support.
If the bears continue selling, the BTC price could drop to the support near $33,700. A breakdown below the immediate support might see Bitcoin price test the 100-day EMA (blue wave) support near $30,350.
Conversely, if the Fed announces a pause in rate hikes, Bitcoin price could start a rally that would push cryptocurrency’s price to the resistance near $37,900. Flipping the immediate resistance might help the BTC price target the resistance near $42,200 before correcting.
The RSI for BTC remained neutral, clocking a score of 62.17 on the daily charts.
