Bitcoin gains as May CPI data shows moderate inflation numbers

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Bitcoin showed a relative price gain momentum Wednesday following the release of the May Consumer Price Index (CPI) data, which showed that inflation grew by 3.3% year-over-year, slightly lower than the 3.4% rate recorded in April. The crypto market reacted positively to the news, as the moderation in inflation fueled hopes for potential interest rate cuts by the Federal Reserve in the coming months.

Bitcoin gained roughly 2.3% over the past hour since the announcement of the May CPI data, with the broader market from the top 20 cryptocurrencies all showing positive movement. Ethereum is also up 2.6% over the past hour, according to data from CoinGecko. Notably, NEAR Protocol’s NEAR token increased the most over the past hour, with a 5.4% rise despite a 13.4% decline over the past week.

According to data shared by Barron’s and released by the Labor Department earlier today, the monthly pace of inflation slowed to 0.1% in May, down from the 0.3% growth rate seen in April. Core CPI, which excludes volatile energy and food prices, also decelerated to an annual rate of 3.5%, the lowest since April 2021.

Ruslan Lienkha, chief of markets at YouHodler, commented on the current market sentiment:

“For Bitcoin, we’re seeing a favorable situation in the market right now. The cryptocurrency can overcome the resistance level in the zone of 71k-73k and renew all-time highs in the following weeks, driven by optimism in financial markets. Such positive sentiment is caused by expectations of coming interest rate cuts in the US and Europe that stimulate capital inflow into risk assets.”

Utushkin also noted the growing risk appetite among investors, as evidenced by elevated trading activity in meme stocks and penny stocks with low ratings. He observed that crypto investors are shifting from major coins towards meme coins, further increasing the market’s risk profile.

“Elevated trading activity with meme stocks such as GameStop and other penny stocks with low ratings shows a growing risk appetite,” explains Lienkha, adding that despite the crypto market already being high-risk by default, their analysis indicates that crypto investors are…