Interest rate cuts and expansions of the monetary supply have a positive effect on asset prices, especially Bitcoin and other cryptocurrencies.
The latest US core Consumer Price Index (CPI) print, a measure of inflation, came in lower than expected at 3.1%, beating expectations of 3.2%, with a corresponding 0.1% drop in headline inflation figures.
According to Matt Mena, crypto research strategist at 21Shares, the cooling inflation data adds to the likelihood that the Federal Reserve will cut interest rates this year, injecting much-needed liquidity into the markets and sending risk-on asset prices higher. Mena added:
Despite the better-than-expected inflation numbers, the price of Bitcoin (BTC) declined from over $84,000 at the daily open to now sit around $83,000 as traders grapple with US President Donald Trump’s trade war and macroeconomic uncertainty.
