Yesterday, the price of Bitcoin surged to reach a fresh yearly high of $31,840, sparking curiosity among market participants who are eager to understand the factors propelling this optimistic trend.
The Power Of Economic Indicators
The release of the United States Producer Price Index (PPI) data emerged as a pivotal element fueling Bitcoin’s upward movement. The most recent statistics unveiled a noteworthy deceleration in inflation, as the PPI YoY dipped to 0.1% in June.
This figure exceeded predictions and represented the slowest pace since August 2020. Furthermore, the Core PPI YoY reached 2.4%, marginally below the anticipated 2.6%, thus strengthening the belief in a diminishing inflationary climate.
The decline in the Producer Price Index (PPI) is being interpreted as a positive indicator for the Consumer Price Index (CPI), instilling optimism for a steadier economic environment. Macro researcher Mortensen Bach underscored the significance of the PPI’s influence, emphasizing that:
“PPI always leads CPI. Inflation is no longer a thing and input prices clearly indicate that! Deflation remains the primary risk going forward. This is what happens when you have a Federal Reserve that is blindly focused on backward-looking data!”
Reiterating these sentiments, macro analyst Ted added:
“PPI inflation leads CPI by a few months… and today’s PPI numbers have YoY running at +0.24%. Almost in deflation! Fed pivot anyone?”
Additionally, it is noteworthy that the inflation in the Producer Price Index (PPI) for May was revised downwards from 1.1% to 0.9%. Similarly, the Core PPI inflation for May was revised downwards from 2.8% to 2.6%. The decrease in and revision of Core PPI inflation aligns with the objectives of the US Federal Reserve, as it reflects their desired outcome.
Inverse Correlation With The DXY
An additional significant catalyst behind the surge in Bitcoin’s value is the recent decline of the US Dollar Index (DXY) below the 100.00 mark, a level that hasn’t been observed in 15 months. This occurrence has reignited interest in risk assets such as Bitcoin, as investors seek to safeguard against a depreciating dollar.
Throughout history, the inverse relationship between the DXY and Bitcoin has consistently exerted a notable influence on the cryptocurrency’s price fluctuations. Consequently, the recent decline in the DXY has emerged as yet another optimistic catalyst, amplifying Bitcoin’s bullish momentum.
Buy Bitcoin NowRipple’s Latest Victory
Bitcoin’s price likely received an additional boost from the ongoing legal clash between Ripple Labs and the US Securities and Exchange Commission (SEC). Ripple’s partial success in the legal case has instilled optimism within the cryptocurrency community, creating a positive sentiment. This development can also be viewed as a favorable occurrence for Coinbase, which is currently entangled in its own legal battle with the SEC.
Coinbase holds a notable position as the exchange partner for all Bitcoin spot Exchange-Traded Funds (ETFs) filed with the SEC in the United States. However, recent remarks made by chair Gary Gensler regarding Coinbase’s role in ETF filings have sparked concerns regarding the exchange’s suitability as a market surveillance sharing partner. This development has triggered discussions and deliberations within the industry about Coinbase’s involvement in such regulatory matters.
Eric Balchunas, a Senior ETF analyst for Bloomberg, raised concerns by suggesting that “SSA could be pointless if this is a problem for him.”
Considering this perspective, the Ripple victory can also be interpreted as highly encouraging news for the potential approval of a Bitcoin spot ETF. This is because Coinbase stands to gain advantages from the outcome of its ongoing legal dispute with the SEC, further strengthening the case for a favorable ruling on a Bitcoin ETF.
