Crypto: US inflation accelerates, Bitcoin declines

Inflation is always and everywhere a monetary phenomenon. Milton Friedman would have frowned at the figure that fell this Wednesday at 2:30 p.m. Paris time. This month, it’s the gas pump that speaks first. American inflation increased by 0.6% in September and climbed to 3.7% year-on-year, compared to 3.4% in August. On the other hand, the core index, the one that the Fed really looks at, surprises at 2.6% while economists saw it stable at 2.4%.

Bitcoin therefore suffered the surprise in a few minutes. It went from around $83,700 to $82,800 according to CoinGecko. The timing is cruel, less than two weeks before a central bank meeting following its September rate hike.

Start with your fill. The price of gasoline jumped 9.1% in one month, according to a press release from the Bureau of Labor Statistics, the American office of labor statistics. This single item explains more than half of the monthly increase in the general index.

Over a year, the addition stings even more. Energy takes 20.4%, gasoline 34.2% and domestic fuel oil 74.2%. The cause is oil that has risen above $100 with the war involving Iran.

Conversely, food stagnates in September. The index is unchanged and supermarket shopping even falls by 0.1%. Small consolation for American households, who pay 4.4% more for their electricity than a year ago.

Remove energy and food, which are too volatile, and you get core inflation. It increased by 0.3% over the month, as in August. Over one year, it reached 2.6% compared to 2.4% the previous month. However, the consensus was counting on 0.2% and stability at 2.4%.

The detail doesn't fix anything. Housing accelerates to 0.4% in September. Plane tickets also gained 1.2% in one month and 22.4% over one year, while used cars gained 0.7%. The kerosene bill always ends up somewhere.

This is the real headache for the Federal Reserve. It raised its rates by 25 basis points on September 16, to 3.75%-4.00%, its first increase since 2023. Before the publication, the markets gave little more than a one in four chance of a new turn of the screw at the end of October. This bet will therefore be recalculated this afternoon.

The crypto market has chosen caution. Bitcoin drops around 1.1% in five minutes after publication. For its part, Ether remains stuck below $2,500.

The decor is enough to chill the most optimistic. Job creation in September was limited to 29,000 positions. And now underlying US inflation is accelerating. With employment at half mast and prices rising, the word stagflation will return to all trading rooms. However, many managers still treat Bitcoin as a bet on liquidity. For them, a Fed forced to tighten its tone remains the worst scenario.

Still keep a cool head. The core index remains at 2.6% over one year, very far from the peaks of 2022. Furthermore, a surge in gasoline ends up turning around when the barrel goes back down. He still has to come down.