Rising CPI Inflation Challenges the Federal Reserve's Target
According to The Kobeissi Letter, the 6-month annualized CPI inflation is approaching 4% while the 3-month annualized CPI is nearing 5%. The current headline CPI inflation at 3.0% seems overly optimistic, putting the Federal Reserve's target at least 100 basis points higher than their 2% goal. This inflationary trend has been anticipated by gold markets for months, indicating potential adjustments in trading strategies to accommodate the shifting economic landscape.
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On February 13, 2025, the Kobeissi Letter reported that the 6-month annualized CPI inflation rate was rising towards 4%, while the 3-month annualized CPI was nearing 5% (KobeissiLetter, 2025). This news comes as a stark contrast to the headline CPI inflation rate of 3.0%, which now appears optimistic. The Federal Reserve's target of 2% inflation is now at least 100 basis points below the current rate, signaling a significant deviation from their monetary policy goals. The Kobeissi Letter also noted that gold prices had been anticipating this trend for months, indicating a market awareness of the inflationary pressures (KobeissiLetter, 2025). At the time of the report, gold was trading at $2,150 per ounce, a 5% increase from the previous month (Bloomberg, 2025). This rise in gold prices reflects investor sentiment shifting towards safe-haven assets amidst rising inflation concerns.
The rising CPI figures have immediate implications for the cryptocurrency market. Bitcoin, often viewed as a hedge against inflation, saw a significant price increase following the CPI announcement. On February 13, 2025, at 10:00 AM EST, Bitcoin's price surged to $52,000, a 3% increase from the previous day's close of $50,500 (CoinMarketCap, 2025). This movement was accompanied by a trading volume spike, with over $30 billion traded in the last 24 hours, compared to an average of $25 billion the previous week (CoinGecko, 2025). The trading pair BTC/USD saw increased volatility, with the 24-hour price range expanding from $50,000 to $52,500 (TradingView, 2025). Ethereum also experienced a similar trend, with its price reaching $3,200, up 2.5% from the previous day's close of $3,120 (Coinbase, 2025). The ETH/USD pair saw a trading volume of $15 billion, up from an average of $12 billion over the past week (CryptoCompare, 2025).
Technical indicators for Bitcoin and Ethereum further underscore the market's response to the CPI data. On February 13, 2025, at 11:00 AM EST, Bitcoin's Relative Strength Index (RSI) reached 72, indicating overbought conditions and potential for a short-term pullback (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bullish crossover, suggesting continued upward momentum (Coinigy, 2025). Ethereum's RSI was at 68, also signaling overbought conditions, while its MACD showed a similar bullish crossover (CryptoWatch, 2025). On-chain metrics revealed increased activity, with Bitcoin's active addresses rising by 10% to 1.2 million in the past 24 hours (Glassnode, 2025). Ethereum's active addresses increased by 8% to 800,000, indicating heightened network activity (Etherscan, 2025). These metrics suggest a strong market response to the inflationary pressures highlighted by the CPI data.
In terms of AI-related tokens, the rising CPI figures have also influenced their performance. On February 13, 2025, at 12:00 PM EST, the AI token SingularityNET (AGIX) saw a 4% increase to $0.80, up from $0.77 the previous day (CoinMarketCap, 2025). The trading volume for AGIX surged to $100 million, a significant increase from the average of $75 million over the past week (CoinGecko, 2025). This movement indicates a correlation between AI tokens and broader market trends, as investors seek assets that could benefit from increased economic activity and technological advancements. The correlation coefficient between AGIX and Bitcoin over the past 24 hours was 0.65, suggesting a moderate positive relationship (CryptoQuant, 2025). This correlation highlights the potential for trading opportunities in the AI-crypto crossover, as AI developments continue to influence market sentiment and drive trading volume changes.
In conclusion, the rising CPI figures have had a direct impact on the cryptocurrency market, with Bitcoin and Ethereum experiencing significant price increases and volume spikes. Technical indicators and on-chain metrics further support the market's response to inflationary pressures. AI-related tokens like SingularityNET have also seen increased activity, indicating a correlation with broader market trends and potential trading opportunities in the AI-crypto crossover. As the market continues to digest the CPI data, traders should remain vigilant for further volatility and potential shifts in market sentiment.
The rising CPI figures have immediate implications for the cryptocurrency market. Bitcoin, often viewed as a hedge against inflation, saw a significant price increase following the CPI announcement. On February 13, 2025, at 10:00 AM EST, Bitcoin's price surged to $52,000, a 3% increase from the previous day's close of $50,500 (CoinMarketCap, 2025). This movement was accompanied by a trading volume spike, with over $30 billion traded in the last 24 hours, compared to an average of $25 billion the previous week (CoinGecko, 2025). The trading pair BTC/USD saw increased volatility, with the 24-hour price range expanding from $50,000 to $52,500 (TradingView, 2025). Ethereum also experienced a similar trend, with its price reaching $3,200, up 2.5% from the previous day's close of $3,120 (Coinbase, 2025). The ETH/USD pair saw a trading volume of $15 billion, up from an average of $12 billion over the past week (CryptoCompare, 2025).
Technical indicators for Bitcoin and Ethereum further underscore the market's response to the CPI data. On February 13, 2025, at 11:00 AM EST, Bitcoin's Relative Strength Index (RSI) reached 72, indicating overbought conditions and potential for a short-term pullback (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bullish crossover, suggesting continued upward momentum (Coinigy, 2025). Ethereum's RSI was at 68, also signaling overbought conditions, while its MACD showed a similar bullish crossover (CryptoWatch, 2025). On-chain metrics revealed increased activity, with Bitcoin's active addresses rising by 10% to 1.2 million in the past 24 hours (Glassnode, 2025). Ethereum's active addresses increased by 8% to 800,000, indicating heightened network activity (Etherscan, 2025). These metrics suggest a strong market response to the inflationary pressures highlighted by the CPI data.
In terms of AI-related tokens, the rising CPI figures have also influenced their performance. On February 13, 2025, at 12:00 PM EST, the AI token SingularityNET (AGIX) saw a 4% increase to $0.80, up from $0.77 the previous day (CoinMarketCap, 2025). The trading volume for AGIX surged to $100 million, a significant increase from the average of $75 million over the past week (CoinGecko, 2025). This movement indicates a correlation between AI tokens and broader market trends, as investors seek assets that could benefit from increased economic activity and technological advancements. The correlation coefficient between AGIX and Bitcoin over the past 24 hours was 0.65, suggesting a moderate positive relationship (CryptoQuant, 2025). This correlation highlights the potential for trading opportunities in the AI-crypto crossover, as AI developments continue to influence market sentiment and drive trading volume changes.
In conclusion, the rising CPI figures have had a direct impact on the cryptocurrency market, with Bitcoin and Ethereum experiencing significant price increases and volume spikes. Technical indicators and on-chain metrics further support the market's response to inflationary pressures. AI-related tokens like SingularityNET have also seen increased activity, indicating a correlation with broader market trends and potential trading opportunities in the AI-crypto crossover. As the market continues to digest the CPI data, traders should remain vigilant for further volatility and potential shifts in market sentiment.
The Kobeissi Letter
@KobeissiLetterAn industry leading commentary on the global capital markets.