The main U.S. inflation rate surged last month to its fastest in three decades, according to a Labor Department report Wednesday likely to be closely tracked by bitcoin traders.
The Consumer Price Index for all items rose 6.2% in the 12 months through October, the highest since 1990. Economists had projected an increase in the October CPI of 5.9% over the past 12 months.
Inflation is closely tracked by cryptocurrency traders, since many bitcoin investors say the digital asset – whose supply is limited by the underlying blockchain’s programming – can serve as a hedge against rising prices.
Bitcoin’s price has more than doubled this year, supporting a broad rally in cryptocurrencies, where the total market value of all digital tokens recently topped $3 trillion for the first time.
The bitcoin price hit an all-time high close to $69,000 earlier this week.
As of press time the largest cryptocurrency was changing hands around $67,400 – up 1.4% since the report came out at 13:30 coordinated universal time (8:30 a.m. ET).
Economists say that supply-chain bottlenecks, shipping constraints and even limited warehouse space as the coronavirus pandemic retreats might be helping to fuel higher prices. That’s in addition to a tight labor market that has put upward pressure on wages. Companies often try to pass these extra costs along to consumers in the form of higher retail prices.
There’s also speculation that the trillions of dollars of money-printing over the past couple years by the Federal Reserve and other central banks might be contributing to dollar debasement – further supporting the investment case for bitcoin, since its supply is tightly controlled.