Bitcoin and Ethereum Surge as Inflation Cools: What It Means for Crypto Markets

Inflation Data Sparks Crypto Rally

Bitcoin and other cryptocurrencies experienced gains on Friday following the release of a key inflation report. The Consumer Price Index (CPI) rose 3% in the 12 months through September, slightly below economists' forecast of 3.1%. This data, delayed due to a government shutdown, has boosted market sentiment ahead of the Federal Reserve's upcoming meeting.

Market Movements

• Bitcoin saw a 2% increase, trading around $111,300, recovering from recent declines.
• Ethereum and Solana also rose, with gains of 2.5% and 2.1%, respectively, though they have lagged behind Bitcoin amid trade tensions.
• On prediction markets, traders favored "Greed" over "Fear," indicating improved optimism after political reassurances.

Broader Economic Context

This marks the third consecutive month of rising inflation after a low in April. Core inflation, excluding food and energy, softened to 3% annually. The Federal Reserve is widely expected to cut interest rates by a quarter point next week, with traders adjusting expectations for future cuts.

Fed officials remain cautious, balancing inflation control with labor market health, as highlighted by Chair Jerome Powell's recent comments on a "meeting-by-meeting approach."

Key Insights

Data suggests that large Bitcoin holders continue to accumulate despite market volatility, supporting the long-term bull structure. The ongoing government shutdown, now in its 24th day, delayed the CPI report but has not derailed market momentum.