Bitcoin reached $92,000 despite rising CPI inflation

Bitcoin rose to $92,000 after the U.S. Consumer Price Index (CPI) showed inflation rose to 2.6 percent year-on-year in October, up from a 2.4 percent rise in September.

The latest inflation figures have raised concerns about the Federal Reserve's monetary policy, hinting at volatility in the crypto market.

Will CPI and Bitcoin Relationship Change Amid Pro-Crypto Sentiment?

Bitcoin's rally can be attributed to the positive sentiment in the crypto market after the US election despite rising inflation. The market is anticipating significant regulatory changes in the US financial system.

Similarly, today's CPI data came in below expectations, as earlier reports suggested inflation may rise.

The Labor Department reported monthly CPI inflation was up 0.2 percent, matching September's figure. However, the annual increase of 2.6 percent marked the first increase in eight months.

Core CPI, which strips out volatile food and energy prices, was unchanged at 0.3% month-on-month and 3.3% year-on-year, in line with expectations.

However, even with today's bitcoin rally, a hawkish stance from the Federal Reserve could inject volatility into the market. A possible rate hike could weigh on investor sentiment, affecting the broader financial markets, including cryptocurrencies.

It is also important to consider the generational perspective that inflation often leads investors to seek assets with limited supply, such as Bitcoin. Additionally, while higher CPI figures increase the likelihood of tighter monetary policy, they also signal continued economic uncertainty.

Bitcoin's ever-high and sustained rally reflects market optimism as it has long-term potential. This is because institutional adoption and positive sentiment around crypto-assets continues to grow even in the face of inflation.

BTC has been a stable currency since inflation has decreased

Bitcoin's behavior in August and September reflected sentiment for macroeconomic cues, particularly inflation and Federal Reserve policy expectations. In August, CPI inflation fell to 2.5%, below both July's 2.9% and market expectations of 2.6%.

This cooling inflation suggested easing inflationary pressures, leading to speculation of a 25 basis point rate cut in September.

Bitcoin's muted reaction during this period shows that the market is highly anticipating the favorable inflation data ahead of the CPI release and inflation.

While inflation rose slightly to 2.9% in September, Bitcoin maintained its position above $61,000. The market saw the figure as a continuation of July's cooling trend, bolstering hopes that the Fed could hold back on further tightening.