Recaps · US CPI · 14 Jan 2020, 13:30 UK
The trend did the talking
In early 2020, before the pandemic hit markets, Bitcoin was having its best start to a year since 2012. A mild inflation report landed in the middle of that rally. Bitcoin did not react at first. The move came about 45 minutes later, and it ran for the rest of the afternoon.
- Release
- Tuesday 14 January 2020, 13:30 UK
- CPI
- +0.2% m/m, 2.3% y/y (BLS)
- Core CPI
- +0.1% m/m, 2.3% y/y
- Annual rate
- Highest since October 2018 (Reuters)
- Bitcoin at release
- $8,542
The numbers
Prices rose 0.2% in December, after 0.3% in November, and core prices rose only 0.1% (BLS). The annual rate reached 2.3%, the highest since October 2018, but Reuters described underlying inflation as tame and said it supported the Fed's plan to keep rates on hold. Nothing here called for a big repricing, and stocks did not move: the S&P 500 ETF was +0.01% after its first hour.
A late start, then a climb
- 1 13:35 UK: about 0.2% down
- 2 14:15 UK: the rally starts
- 3 17:05 UK: high, about +2.8%
Bitcoin was -0.19% after five minutes and still near flat at 13:45 UK. From about 14:15 UK it climbed, reaching +1.74% at the hour, #20 of 117 CPI reports at 3.3 times a normal hour, and about 2.8% up at 17:05 UK. Cointelegraph reported a 2% jump in just over an hour to $8,745. Litecoin's first hour was 4.7 times its normal size.
| Market | 15m | 1h | 4h | 24h | 1w | × normal hour |
|---|---|---|---|---|---|---|
| Bitcoin | +0.03% | +1.74% | +2.18% | +2.84% | +1.15% | 3.3× |
| Ethereum | +0.13% | +2.20% | +5.56% | +9.30% | +10.18% | 3.4× |
| XRP | −0.13% | +1.68% | +7.00% | +6.89% | +7.10% | 2.1× |
| Litecoin | +0.42% | +3.67% | +4.60% | +6.20% | +4.55% | 4.7× |
Change from the 13:30 UK release.
Was it the report?
Probably not much. Bloomberg reported that Bitcoin had gained about 20% in two weeks, and that some smaller coins, including Dash and Bitcoin SV, had more than doubled. Bitcoinist linked an earlier jump that day to about $38 million of short positions being closed out on BitMEX. A release that moves Bitcoin 45 minutes late, while stocks are flat, looks more like a rally carrying on than a reaction to the data.
The two reports on either side support that reading. In December 2019, Bitcoin moved 0.2% in the first hour after CPI. In February 2020 it moved less than 0.1%, then fell 1.2% at four hours. Neither was a big data surprise, and neither landed in a strong trend. The useful habit is to check when a move starts: one that begins at 13:30 is a reaction, and one that begins later usually has another cause. Ether was +9.3% a day later and +10% after a week.
Sources: release time and figures from the U.S. Bureau of Labor Statistics (public domain), first-print values via ALFRED, Federal Reserve Bank of St. Louis. Crypto: Bitstamp 5-minute candles; SPY/QQQ: IEX. No consensus forecasts are shown because they are proprietary; comparisons are with the previous release. “× normal hour” compares the first-hour move with the median move in matched quiet hours. How we measure it.