Replays · US CPI · 10 Nov 2021, 13:30 UK
The inflation print that coincided with Bitcoin's 2021 high
Forty-five minutes after the US reported its highest inflation rate in three decades, Bitcoin traded at about $69,000. It was the top of the 2021 bull market. The story that inflation was good for Bitcoin never looked stronger than it did that afternoon, and it never looked weaker than it did a week later.
A figure nobody could ignore
Consumer prices rose 0.9% in October alone, more than double the previous month's 0.4%. The annual rate jumped from 5.4% to 6.2%, and core inflation, which strips out food and energy, rose to 4.6%. For most of the year the Fed had called inflation transitory. A 6.2% print made that harder to say, and markets began to price earlier rate hikes.
Crypto had its own reading. Many Bitcoin holders saw it as a hedge against a weakening dollar, and here was the clearest evidence yet that the dollar was losing purchasing power.
Straight to the high
- 1 13:30 UK: the October CPI report
- 2 14:15 UK: Bitcoin's high, close to $69,000
- 3 14:30 UK: US stocks open
There was no hesitation. Bitcoin was up 2.5% after half an hour. The peak came on the 14:15 UK candle, about 4% above the release price, a little under $69,000. The move cooled slightly as US stocks opened, but Bitcoin held most of it, finishing the first hour +2.97% higher, 5.6 times a normal hour and #11 of 117 CPI releases in our data.
The rest of the market followed but not evenly. Chainlink outpaced Bitcoin with a 5.2% first hour, Ether rose 2.5%, while XRP barely held a gain. The S&P 500 ETF rose only 0.29% in its first hour.
How it unwound
| Market | 1h | 4h | 24h | 1w | × normal hour |
|---|---|---|---|---|---|
| Bitcoin | +2.97% | +3.30% | −2.10% | −9.12% | 5.6× |
| Ethereum | +2.49% | +2.87% | +0.15% | −10.15% | 3.8× |
| Chainlink | +5.20% | +4.84% | −0.06% | −18.08% | 6.5× |
| Litecoin | +2.18% | +3.35% | −5.26% | −16.54% | 2.8× |
| XRP | +0.73% | +1.76% | −7.55% | −16.22% | 0.9× |
| S&P 500 ETF (SPY) | +0.29% | −0.11% | – | – | – |
| Nasdaq-100 ETF (QQQ) | +0.57% | −0.28% | – | – | – |
Change from the 13:30 UK release price.
The table tells the second half of the story. By the next afternoon Bitcoin was 2.1% below the release price. A week later it was down 9.1%, and Litecoin and XRP were down more than 16%. The same inflation that seemed to support crypto was pushing the Fed towards tighter policy, and tighter policy turned out to matter far more. Bitcoin did not trade at that level again for more than two years.
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.