Bitcoin has taken a bit of a hit, dropping over 4% in the last 24 hours to hover around the $58,000 mark. If you’ve been keeping an eye on the market, you probably noticed this retraces almost all the gains we saw over the past week.
The latest U.S. Consumer Price Index (CPI) numbers, released late on Wednesday, played a big role in the dip. July’s CPI showed a 2.9% increase year-on-year, which is exactly what analysts expected. But here’s the thing—it’s the first time since 2021 that the CPI has dipped below 3%.
Now, if you’re wondering what this means for Bitcoin, you’re not alone. The market sentiment is pretty bearish right now. But Matt Hougan from Bitwise shared an interesting perspective. He somewhat sarcastically pointed out two key takeaways from the CPI numbers. First, he expects the Federal Reserve to start cutting rates in September. Second, he thinks 3% might be the new normal for inflation, rather than the old 2% target. According to him, both of these points could be good news for Bitcoin, even if it doesn’t feel that way at the moment.
There are two take-aways that matter from the CPI:
1) The Fed will start cutting rates in September.
2) 3% is the new baseline for inflation, not 2%.Both are bullish for bitcoin.
— Matt Hougan (@Matt_Hougan) August 14, 2024
But that’s not all. U.S.-listed spot Bitcoin ETFs saw $81 million in net outflows on Wednesday, breaking a two-day streak of positive inflows. This certainly added to the bearish mood around Bitcoin.
As the week winds down, we still have some key data releases to keep an eye on.
On Thursday, we’ll be getting the July Retail Sales data, which could give us insight into consumer spending trends. Also on Thursday, the Philly Fed Manufacturing Index will be released, shedding light on the manufacturing sector’s health. Then, on Friday, the July Housing Starts data will come out, providing an update on the state of the housing market. These reports could play a role in shaping market sentiment as we head into the weekend.
Keep following us at HowToBuyBitcoin.org for the latest news and updates on Bitcoin.