
Hold onto your hats, folks, because the financial world is buzzing with some intriguing shifts! Inflation in the US dollar has ticked up to 2.6% in October, after steadily declining from a high of 3.5% in March. Meanwhile, Bitcoin has been on a wild ride, seemingly out of sync with the usual trends. The big question on everyone's lips is: Are we about to see a cozy reunion between stocks and Bitcoin?
According to the latest scoop from the US Bureau of Labor Statistics, the Consumer Price Index (CPI)—which keeps tabs on how the dollar's purchasing power changes over time—hit 2.6% in October. This could be the spark that ignites a bull run in dollar-based assets as we head into 2025. Remember, a rising CPI means our everyday goods are getting pricier.
From March to September, the CPI was on a downward slope, prompting the Federal Reserve to slash interest rates in September. This move seemed to give Bitcoin a boost as its value surged through October, alongside an upswing in Wall Street stocks. The S&P 500, a key stock market benchmark, has been smashing records left and right, and Bitcoin isn't far behind, soaring to a jaw-dropping new high of over $93,000 after the November elections.
Inflation cooled from 3.5% in March to 2.4% in September, a hefty 25.71% drop. During this time, the S&P 500 climbed by 8.59%, while Bitcoin took a minor hit, dropping 1.53%. But with inflation on the rise again, could Bitcoin be gearing up to hit more record highs?
Crypto enthusiasts are already buzzing with predictions. Some analysts foresee Bitcoin skyrocketing into the six-figure zone by 2025, with estimates ranging from $150,000 to $200,000. Last December, Bitcoin ETF issuer VanEck put a $100,000 price tag on Bitcoin by the end of 2024, and we might just be on track for that milestone.
As the dollar cranks up the printing presses, Bitcoin and stock prices are starting to move in tandem again. The relationship between Bitcoin and the stock market, measured by the 30-day Pearson Correlation, hit a 44-month peak of 0.89 in September. Though it dipped to 0.49 around election time, it bounced back to 0.80 with the latest CPI news.
What's driving this newfound correlation? Well, big institutions are snapping up both stocks and Bitcoin, fueled by freshly minted money. Lark Davis, a well-known Bitcoin analyst, pointed out that “BlackRock just keeps buying.” Between November 6th and 13th, Wall Street offloaded over $4.73 billion in Bitcoin ETFs. But when institutional investors took a breather, BlackRock swooped in, buying $126 million worth of Bitcoin during the dip.
As one Ethereum analyst cheekily put it, “BlackRock knows.” So, sit back, grab some popcorn, and watch this financial drama unfold!