Bitcoin Cheers for Signs of Slow Inflation

According to Upbit, a virtual asset exchange, Bitcoin was traded at 32,359,000 won per unit as of 9 a.m. on the 13th, up 5.23 percent from the same time last week. Earlier this week, Bitcoin was reeling ahead of the announcement of the CPI in July. This is because the CPI growth rate will determine the level of interest rate hikes at the Federal Open Market Committee (FOMC) meeting in September. However, Bitcoin prices have fluctuated in the 30 million won range, which is a psychological barrier.


But market expectations for signs of slowing inflation have grown. On the 8th (local time), the U.S. Federal Reserve said in a consumer outlook survey in July that the expected inflation rate for the next year was 6.2%. It is slightly lower than the previous month (6.8%). The expected inflation forecast for the next three years also eased 0.4% from 3.6% in July, and the expected inflation forecast for the next five years fell 0.5% to 2.3%.

However, the market predicts that such an upward trend will not lead to a strong market. Mike Novogratz, CEO of Galaxy Digital, said, “For the time being, Bitcoin will be difficult to surpass 30,000 dollars (39,165,000 won), and analyzed, “It is difficult to have the same strength as 2017 and 2021 due to the Fed’s tightening policy.”

However, Bitcoin began to move upward as the U.S. Department of Labor announced on the 10th (local time) that the CPI growth rate in July rose 8.5% year-on-year. The increase slowed significantly from June (9.1%), the highest in 41 years since 1981. The figure is also below the market expectation of 8.7%. In addition, as the U.S. Producer Price Index (PPI) falls below the market forecast, Bitcoin’s upward trend seems to be gaining momentum. The increase slowed significantly compared to last June (9.1%), the highest in 41 years since 1981.

The market predicts that the U.S. Federal Reserve may turn to Big Step (a 0.5% increase in the benchmark interest rate) instead of Giant Step (a 0.75% increase in the benchmark interest rate) at the Federal Open Market Committee (FOMC) scheduled for next month. As a result, investor sentiment is also showing signs of being out of the fear stage. The self-estimated “fear and greed index” of virtual asset data provider Alternative rose 4 points from the previous day to 46. The closer the index is to 0, the more extreme fear it represents, and the closer it is to 100, the more extreme optimism it represents.