Replays · US CPI · 10 Aug 2022, 13:30 UK

Zero, after a year of big numbers

A month after the 9.1% shock, the July 2022 inflation report showed consumer prices unchanged. For crypto, it was a reverse image of the previous month: every coin rose on the first candle, and Ether rose most.

Monthly change in headline CPI, first prints (ALFRED), by reference month. July's figure was published on this day.

What changed

According to the BLS, the gasoline index fell 7.7% in July, which offset rises in food and shelter and left the overall index flat. Annual inflation eased from 9.1% to 8.5%. Core prices rose 0.3%, half June's 0.7%. It was the first clear sign that the peak might be behind.

A bigger move than the 9.1% report

First-hour move as a multiple of each coin's normal hour.

Ether's first hour was 13.2 times its normal hour, ranking #3 of 109 CPI releases in our Ether data. Bitcoin's was 9.8 times, #6 of 117. Chainlink kept going after the first hour and was 10% higher at four hours. Cardano was the laggard, up only 2.3%.

1 13:30 UK: the July CPI report
2 14:25 UK: Bitcoin about 4.7% above the release price, near $24,180

Bitcoin, five-minute candles from 30 minutes before to four hours after. % from the 13:30 UK price of $23,091. Source: Bitstamp.

Bitcoin rose 2.0% on the first candle and kept climbing for most of the hour, peaking near $24,180 at 14:25 UK. Unlike many CPI spikes, it held. The four-hour figure was +4.1%, and after 24 hours Bitcoin was +6.7% and Ether +12.6%.

US stocks showed almost nothing in the first hour, with the S&P 500 ETF -0.27%. The pound rose 1.3% against the dollar at the fix, a sign the dollar weakened on the news.

Why did Ether react more than Bitcoin? The CPI report itself said nothing about crypto. But since mid-July, Ether had been rising on expectations for the Merge, and that may have made traders quicker to buy it when the macro news turned positive.

The pattern across coins is also worth noting. Chainlink, which had the second-biggest first hour, kept rising for four hours, while XRP and Litecoin stopped climbing after about an hour.

A month of mirror images

Put this replay next to the July report and the pattern is clear: a hot number in July, a 5% Bitcoin drop; a soft number in August, a 4.6% gain. Over the following week, though, most of the extra gains faded, and Bitcoin finished +2.2% after seven days.

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.