Bitcoin’s price touched the $65,000 barrier and was trading at $64,961.60 as of 11:38 AM ET on May 15, 2024, representing an increase of more than 5% over the past 24 hours.
The cryptocurrency’s upward trajectory follows softer-than-expected Consumer Price Index (CPI) data, indicating a positive market reaction to the latest inflation news. This surge has propelled Bitcoin to its highest levels since March 2024, when it hit record highs of over $73,000.
CPI data eases inflation fears, weakens market sentiment for Bitcoin
The release of the CPI data, which indicated a more stable inflationary environment, boosted market sentiment and contributed to Bitcoin’s recent price rally.
Federal Reserve Chairman Jerome Powell’s suggestion that interest rates will not rise further has also provided a more favorable backdrop for Bitcoin investments.
However, the cryptocurrency has faced downward pressure from regulatory threats and a decline in capital inflows into crypto investment products. Additionally, Bitcoin’s recent halving event, which reduced the per-block coin release to 3,125 BTC, affected miner profitability and overall market dynamics.
CPI in line with expectations in April
The CPI for all urban consumers (CPI-U) increased by 0.3% in April 2024, a slight decrease from the 0.4% increase recorded in March. On a year-over-year basis, the all-items index rose 3.4%, matching economists’ expectations and slightly lower than the 3.5% rise seen in March.
Core CPI, which excludes food and energy prices, rose 0.3% in April, in line with forecasts but down from the 0.4% increase in March. The shelter and gasoline indices were the primary drivers of the monthly CPI increase, together accounting for more than 70% of the overall increase.
The CPI is a crucial indicator of inflation, which reflects the cost of living and influences the Federal Reserve’s monetary policy decisions. Stable or lower-than-expected CPI numbers could ease market concerns about aggressive interest rate hikes, which typically hurt investment assets like Bitcoin.
The April CPI data raised hopes of potential Fed rate cuts, although current inflation levels and economic growth still warrant caution. Additionally, CPI data influences consumer confidence and spending patterns, which are critical to economic health and investment climate.
The relationship between Bitcoin and inflation data
Bitcoin’s price often reacts to inflation data and monetary policy signals, as some investors view it as a hedge against inflation.
Positive CPI data could lead to a stronger dollar and higher interest rates, potentially reducing Bitcoin’s appeal as an alternative investment. Conversely, softer inflation data, as observed in April 2024, could boost Bitcoin prices by lowering expectations of aggressive rate hikes, thereby maintaining a more favorable investment environment.
In addition to CPI data, Bitcoin’s market behavior is influenced by broader economic indicators, such as retail sales and the Producer Price Index (PPI), which can provide early signals of inflationary trends. Furthermore, regulatory developments and capital flows in cryptocurrency products further intertwine Bitcoin’s performance with inflation and economic policy.
Do you think Bitcoin can reach $100,000 in 2024? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
About the author
Tim Fries is the co-founder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a senior associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in surveillance, protection and control solutions.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
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And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
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