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The April CPI report revealed a year-over-year inflation rate of 3.4%, down from 3.5% in March, according to the U.S. Bureau of Labor Statistics (BLS). This decrease in inflation, albeit modest, had a notable impact on the cryptocurrency market, particularly Bitcoin and Ethereum.
Bitcoin and Ethereum Price Reacts
In response to the CPI data, Bitcoin’s price has surged by 7.52% over the past 24 hours, currently trading at $66,240. This marks a continued bullish trend for Bitcoin, sensitive to macroeconomic indicators like inflation rates and Federal Reserve policy signals.
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, also experienced an uptick in its price. ETH rose to approximately $3,016, a 4.17% increase in 24 hours, demonstrating a positive reaction similar to Bitcoin’s. The correlation between these top cryptocurrencies and inflation data underscores the growing role of digital assets in financial markets as a hedge against inflation.
April CPI Report Impact on Markets
The slight decrease in the inflation rate to 3.4% reflects the Federal Reserve’s ongoing efforts to control inflation through monetary policy adjustments. The Fed’s indication of a potential pause in interest rate hikes has been a crucial factor influencing market sentiment. Investors often view lower inflation and potential policy easing as conducive to riskier asset classes, including cryptocurrencies.
 
In the first quarter, inflation picked up pace due to strong domestic demand, following a moderation period last year. The recent deceleration in April’s inflation was a welcome change, especially after Tuesday’s data indicated a sharp increase in producer prices.
Economists attribute the inflationary pressures to service providers, such as motor vehicle insurance, housing, and healthcare, who are adjusting to higher costs. They predict inflationary pressures will lessen this quarter, with prices gradually moving toward the Federal Reserve’s 2% target as the labor market shows signs of cooling down.
Market Reactions and Future Outlook
The immediate positive response from the cryptocurrency market suggests that investors are optimistic about the potential stabilization of inflation and its implications for monetary policy. As Bitcoin and Ethereum continue to react to macroeconomic indicators, market participants will closely monitor future CPI reports and Federal Reserve decisions for further direction.
Markets are reacting to the latest U.S. Consumer Price Index (CPI) report, which indicates that inflation decreased in April. This development may increase the likelihood of the Federal Reserve considering rate cuts. The report follows a series of inflation readings that were higher than expected, leading traders to adjust their expectations regarding the timing of potential rate cuts this year.