- U.S. CPI data below forecasts boosts Bitcoin above $111K on Fed rate cut hopes.
- Core inflation steadies as traders anticipate two more Federal Reserve cuts.
- CPI release during shutdown sparks broad crypto rally ahead of FOMC meeting.
Bitcoin surged on Thursday after new inflation data from the U.S. Consumer Price Index (CPI) came in weaker than expected, strengthening the case for further rate cuts by the Federal Reserve. According to the Bureau of Labor Statistics (BLS), headline inflation rose 3% year-on-year (YoY) in September, compared with projections of 3.1%, while the monthly CPI gained 0.3%, below the forecast of 0.4%.
The softer data boosted market confidence, pushing Bitcoin above the $111,000 mark within minutes of the release. Investors saw the lower CPI reading as a sign that the Fed could deliver another rate reduction during its upcoming Federal Open Market Committee (FOMC) meeting next week.
Bitcoin Reacts to Softer Inflation and Fed Policy Outlook
Market analysts observed that the weaker CPI report provided relief to traders concerned about persistent inflation pressures. The Core CPI, which excludes volatile food and energy categories, rose 3% YoY, exceeding expectations of 3.1%, and 0.2% month-on-month (MoM), below the 0.3% estimate. These results show that price growth is stabilizing across major categories even despite ongoing supply and demand challenges.
Following the release, Bitcoin extended its earlier gains from the Asian and European sessions. Data from TradingView showed that the cryptocurrency recorded a breakout above $111,000, reversing early-week losses. The move coincided with renewed optimism that monetary conditions could ease further before year-end, with two additional Fed rate cuts now seen as possible.
CPI Release Amid U.S. Government Shutdown
The Bureau of Labor Statistics confirmed that this CPI report was the only dataset released during the ongoing U.S. government shutdown. Originally scheduled for October 15, the report had been delayed but was eventually published due to its value in shaping financial policy and market expectations. The BLS noted that all other scheduled releases remain postponed until government operations resume.
Despite the limited data flow, the CPI release provided major insight into the state of consumer prices. The results supported a broader market rally that began earlier in the day following reports of President Donald Trump’s confirmed meeting with Chinese President Xi Jinping, an event investors interpreted as potentially easing global trade tensions.
Bitcoin Leads Market Rally Ahead of FOMC Meeting
As inflation data confirmed a small slowdown, traders increased their bets that the Federal Reserve will lower rates by 25 basis points (bps) at next week’s FOMC meeting. The probability of additional cuts later this year has also climbed, suggesting policymakers are prioritizing growth amid easing inflation pressures.
With Bitcoin leading the charge, the broader crypto market turned positive, mirroring traditional asset responses to expectations of looser monetary policy.
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About the Author: Peter Mwangi
