After the May U.S. Consumer Price Index (CPI) results came in flat, lowering hopes for better inflation data, the cryptocurrency market enjoyed a notable comeback today. Last month the U.S. CPI stayed the same, a drop from 0.3% in April. Surpassing forecasts that it would remain constant, year-over-year (YoY) CPI dropped from 3.4% in April to 3.3% in May.
Last month, core CPI YoY fell from 3.6% to 3.4%, the lowest rate since April 2021. Analyst forecasts for this index came back at 3.5%. Based on CoinGecko’s analysis of this encouraging data, the overall market valuation of cryptocurrencies increased by 3%, reaching $2.65 trillion.
Rising nearly 4%, Bitcoin (BTC) snapped a two-day losing run and topped $69,300. Ethereum (ETH) did likewise, rising almost 3% to $3,639 at the time of writing. Other top digital assets for the day also showed meager increases: BNB, Solana (SOL), XRP, Dogecoin (DOGE), and Toncoin (TON).
Crypto Market Prepares for FOMC Meeting Amid Inflation Expectations
Ahead of the Federal Open Market Committee (FOMC), a QCP Capital study revealed that investors and crypto traders expected lower inflation. The company reported “aggressive buying” of June 13 calls and raised funding rates, implying that the market was setting itself for an upward movement.
“A neutral FOMC outcome could drive the crypto market to retest its highs once more,” analysts from QCP Capital said. The paper underlined that if the Federal Reserve’s activities match those of other big central banks, cryptocurrencies, and other risk assets could attract liquidity flows. Rates have lately been lowered by the Bank of Canada and the European Central Bank.
Following the CPI announcement, the U.S. dollar index (DXY) climbed to a 30-day high, suggesting increasing availability of funds for investment. As investors search for better returns, this rise in accessible capital could propel the crypto market even further.
Today’s CPI report has definitely set a good tone and gives a hopeful view for the upcoming weeks as the market observes the FOMC’s next action.
