The exclusive data shows a drop in the Consumer Price Index in the US for August. As per the on-chain analytics firm Lookonchain, the decreased CPI has displayed a year-on-year jump of up to 2.5%, marking the 5th consecutive month in the case of inflation decline as a substantial trend for the crypto market.
US CPI Indicates a Dip in Inflation, Signifying an Increased Market Stability
The CPI operates as a chief indicator that measures inflation. In this respect, it tracks the price changes in a group of services and goods over time. In times of high inflation, it wears down purchasing power, influencing both the conventional markets and crypto assets like Bitcoin. On the other hand, decreased inflation rates, as is the case now, may point toward heightened economic stability. This can positively influence the overall investment environment.
In the crypto sector, Bitcoin has expressed a resilient correlation with the overall macroeconomic indicators. They take into account inflation data like the CPI. The data that Lookonchain has provided to relate the Bitcoin price and CPI trends highlights a strong relationship. In line with the data, the inflation changes can impact the price movements of Bitcoin. In this respect, lower inflation often corresponds to higher $BTC prices.
Investors May Return to Bitcoin and Other Riskier Assets as Inflation Leads to a Price Rise for $BTC
As the Lookonchain data suggests, the price of Bitcoin goes up when inflation drops. Investor behavior can best explain this correlation. During the high inflation time, investors may leave the riskier assets such as crypto assets. Thus, they might favor conventional inflation hedges like treasury bonds or gold. Nevertheless, as inflation plunges, market members may comfortably return to riskier assets such as Bitcoin.
