01/11/2024
How Do CPI Announcements Affect Bitcoin Price?
On a daily basis, from the Bitcoin (BTC) open price on the day of the CPI report to the BTC open price the next day, Bitcoin price falls or rises regardless of the direction of the inflation rate shift. For instance, when the CPI report showed a drop from 8.5% to 8.3% (annualized) between March and April 2022, Bitcoin price dropped -11%.
Vice versa, Bitcoin's price went up 9.68%, following a CPI report showing an inflation decrease from 8.2% to 7.7% (annualized) between September and October 2022.
In May 2024, when BTC price went up 7.02% a day after the CPI announcement, the report showed a slight decline from 3.5% to 3.4% (annualized). Notably, when there was an inflation spike from 7.5% to 7.9% in the March 2022 report, Bitcoin price actually dropped by 6.37%.
In other words, the logic assumed regarding the relationship between Bitcoin price and CPI announcements doesn’t manifest in the data. This makes sense once we look at monthly BTC price change and wider drivers that have a greater effect.
