The cryptocurrency market cap has increased, with the value of bitcoin rising back above $28,000, (£22,000) after US inflation eased in April.
According to the US Bureau of Labor Statistics' Consumer Price Index released on Wednesday, the annual US inflation rate slowed to 4.9% in April, down from 5.0% in March and contrary to economist forecasts that had expected a figure of over 5.0%.
Amid speculation that lower inflation data could lead to a U-turn on Federal Reserve rate hikes, major cryptocurrencies reversed their downward trajectories.
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Bitcoin (BTC-USD) is now back above $28K, up almost 2$ in the past hour, now priced at $28,152.
Ether (ETH-USD), the native cryptocurrency of the Ethereum blockchain has risen by 1.7% in the past hour to $1,881
According to Coingecko data, the global cryptocurrency market cap today is $1.21tn, an increase of 1.4% in the last 24 hours.
The news follows a Federal Reserve announcement last week that suggested it could pause its long series of rate hikes if data showed a notable amount of cooling, even though inflation remains well above its 2% target.
After the last meeting of the Federal Open Market Committee on May 3, the US central bank made it clear that “it will take a data dependent approach to determine the extent of further rate hikes” as elevated inflation levels and the banking sector stress remain in focus.
The latest CPI reading has cooled considerably since peaking out around 9% in June 2022, but the report presents mixed news on inflation.
Federal Reserve officials will have added aspects to consider when deciding on future rate adjustments, as shelter costs, accounting for about one-third of the CPI weighting, increased 0.4% monthly and 8.1% annually, suggesting a key inflation driver continues to rise.
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