Bitcoin surges to $ 49,000 amid fears over 5% inflation is here to stay

Bitcoin ( BTC ) edged up on September 18 as attention shifted to the Federal Open Market Committee (FOMC) policy meeting following fallin...


Bitcoin (BTC) edged up on September 18 as attention shifted to the Federal Open Market Committee (FOMC) policy meeting following falling inflation figures last Tuesday.

The BTC / USD exchange rate approached $ 49,000 on the Coinbase exchange, reaching $ 48,825 before declining due to sentiment of intermediate profit taking. Nonetheless, the surge has raised expectations that the pair will hit $ 50,000, a psychological resistance target, in the coming sessions.

Inflation fears are boosting demand for Bitcoin

Bitcoin markets were boosted by fears of ever higher inflation, despite a lower Consumer Price Index (CPI) report released on September 13.

Data showed that the US CPI rose 5.3% year-on-year in August, down from 5.4% the month before. The market has received mixed reactions to these figures, with some applause that core inflation came out lower than expected while others pointing that inflation was still at ridiculously high levels, with 5.3% being one of the highest figures in over a decade for the CPI.

“I like to look at inflation data in a middle way (so rather than having one crazy category to run it all, we look at the center of the distribution, across 82 categories, also weighted),” Jens said. Nordvig, founder of data. analysis company Exante Data. He added:

“At [median] metric, [inflation] the number was not low. “

Other bullish indices for Bitcoin emerged as analysts at TD Securities Noted The Federal Reserve could delay the planned reduction in its monthly asset purchase policy by $ 120 billion after the lower-than-expected inflation report.

In addition, Anthony “Pomp” Pompliano, partner at Pomp Investments, warned that sustained inflation of 5% would force Americans to see their savings evaporate.

“The only way to protect yourself in this environment is to make sure you are invested”, Pomp said in a note to customers.

“The more you invest in the markets, be it stocks, real estate, crypto, etc., the better off you will be.”

The dollar goes up in tandem

In this case, the exchange rate BTC / USD jumped up 4.85% on the day of the release of inflation data.

The pair rose another 2.17% on Wednesday, with prices closing above $ 48,000. Its prices started to consolidate sideways over the next two sessions, approaching $ 49,000 on Saturday.

Surprisingly, the US dollar index (DXY) has also moved higher like Bitcoin, repeating that macro investors moved capital to assets they saw as their safe haven in the wake of the inflation report. The index, which measures the dollar against a basket of major foreign currencies, jumped 0.41% on Friday to 93.246, its highest level in September.

Bitcoin and US dollar index rise after mixed inflation outlook. Source: TradingView.com

More signals for Bitcoin and the dollar markets should be expected from next week’s FOMC meeting.

Related: Bitcoin struggles at $ 40,000 after Jerome Powell’s ‘most confusing’ press conference

Fed officials agree they would start easing monetary policies by the end of the year. But the Non-Farm Payrolls (NFP) report earlier this month showed that the U.S. labor market has not fully recovered.

This would prompt the Fed to stick with its reduction plans, and any further delay could result in both Bitcoin’s strength and dollar weakness.

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