The most recent Consumer Price Index report displayed positive news for risky assets such as bitcoin and another crypto.
Inflation in the American economy is showing signs of deceleration. In fact, the nation’s inflation is slowing down for the 6th month straight.
The consumer price index fell 0.1% month over month in December, according to the Labor Department, after rising 0.1% in November.
Overall, the CPI Index rose at a yearly pace of 6.5%, while still not totally good news, it is still a steep decrease from the previous month’s 7.1%.
The driving force for that decrease is due to gas prices decreasing in America, and also the energy costs falling by 4.5%.
Food costs also slowed down its increase, only a 0.3% increase, compared to November’s 0.5%.
As a result, annual inflation reached its slowest pace in 15 months.
How Bitcoin Reacted to CPI Index Report
Trading at around $18,200 since the beginning of the day, bitcoin showed a small reaction to the Consumer Price Index report.
After the report, BTC fell to $17,997 – testing the $18,000 resistance, which talked about previously, is arguably the most important price-action zone in bitcoin’s history.
Moreover, the cryptocurrency bounced back from that retraction, trading at $18,138 at this time of writing.
With the signs of inflation decreasing, the Federal Reserve is likely to start decreasing its interest rates. If that happens, the market becomes more “risk-friendly”, and assets like stock and crypto tend to grow in value.
However, Bitcoin’s performance today is better than stock. In the last 24 hours, BTC is seeing a 4.36% increase, while the S&P 500 is only at around a 0.50% increase.
Overall, the conditions for the cryptocurrency market in 2023 seem to be far better for bitcoin than the year before. So far, BTC went through a 10% raise in the first two weeks of 2023.
If Bitcoin is able to recover to the price it had before the FTX collapse affected the market, the growth in 2023 would be of 20%.
