Bitcoin and Ethereum Unfazed as June CPI Report Hits 3%: Market Analysis

 Following the release of June's inflation data from the U.S. Bureau of Labor Statistics (BLS), which showed a monthly Consumer Price Index (CPI) increase of 0.2% and an annual increase of 3.0%, Bitcoin continued to trade unchanged at about $31,700 on Wednesday.

 Ethereum only had a marginal rise of 1.3% and is currently trading at about $1,900.

The growth fell slightly shy of Dow Jones' polled economists' expectations, which called for a 0.3% month-over-month rise and a 3.1% yearly rise.

The BLS reports that the core CPI increased by just 0.2%, which is the "smallest 1-month increase in that index since August 2021," despite the food and energy sectors being excluded owing to their well-known volatility.

After reaching a peak of 9.1% in June of last year, the Federal Reserve has aggressively increased its policy interest rate since March 2022 in an effort to bring soaring inflation back to its 2% target in the United States.

The central bank's initiatives appear to be working so far, since annualized inflation is down 1% from just last month.

Unfortunately for investors, rising interest rates have also played a role in the collapse of stock and cryptocurrency prices over the past year, forcing both significant tech and blockchain companies to implement significant layoffs.

Consequently, declining inflation is typically viewed as positive for markets since it signals that the Fed is getting closer to changing its aggressive monetary policy.

Despite the fact that the central bank decided to maintain its policy rate last month, Fed Chairman Jerome Powell has been reticent to say whether this means rate hikes would stop or resume soon.

Markets are 91% certain that another 0.25% rate hike will be announced at the upcoming Federal Open Markets Committee (FOMC) meeting on July 26, according to the CME FedWatch tool.

The Personal Consumption Index (PCI) data for June, which monitors how consumers' purchasing patterns evolve over time, is still awaited by the markets. This is the Fed's preferred method of measuring inflation because it is thought to be a reliable indicator of future inflation trends. This number is presently expected to be 3.2%.

The lack of movement in Bitcoin on Wednesday may have been a reflection of where it is in its cyclical market cycle.

As stated by Glassnode on Monday, the price of Bitcoin has achieved a "equilibrium point" that frequently denotes the beginning of a "accumulation phase" in which the asset's price will trade steadily for several months.

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