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Bitcoin is having its best day since March following April’s freshest inflation reading
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Bitcoin jumped with actions on Wednesday, after the April consumer price index showed a slowdown in inflation from the previous month.
According to Coin Metrics, the cryptocurrency’s price rose more than 7% to $66,124.59, marking its best day since March 25. Additionally, it traded above its 50-day moving average for the first time since April 13.
“The slightly lower-than-expected CPI number modestly increased the possibility of a rate cut, which is still a strong influencer of bitcoin price,” Owen Lau, an analyst at Oppenheimer, told CNBC. “After ETFs and the halving, the next big catalyst will be a rate cut. Bitcoin is likely to remain rangebound and trade alongside macro data, until we see a clearer path to a rate cut.”
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Bitcoin jumps on the back of easing US inflation
THE Consumer price indexa broad measure of how much goods and services cost at the cash register, increase of 0.3% compared to March, the Department of Labor’s Bureau of Labor Statistics reported Wednesday. This was slightly lower than the Dow Jones estimate of 0.4%. Consumer prices are still up 3.4% compared to a year ago.
“As the U.S. core consumer price index cools for the first time in six months, we could see a resurgence in investor appetite for risky assets like cryptocurrencies, spurring more flows into spot bitcoin ETFs, which they have been particularly quiet in the past week,” said Leena ElDeeb, an analyst at 21Shares.
“Though with rate cuts still in question, the recovery may be slow,” he added. “Typically, higher interest rates make risky assets like tech stocks and bitcoin less attractive, as investors can lock in substantial returns from safer options like U.S. Treasuries.”
Bitcoin holds a unique position as both a risky and risky asset, and many investors take a long-term view of the cryptoasset, ElDeeb explained, adding that while Fed policies may induce short-term bitcoin volatility, they do not it fundamentally changes bitcoin’s long-term trajectory.
Lately, bitcoin has been influenced more by macro factors, with industry catalysts like the launch of bitcoin exchange-traded funds and the halving in the rearview mirror. Earlier this week, so did bitcoin skipped a two-day revival of the meme craze.
With Wednesday’s gain, bitcoin is now up 8.92% for the week – its best week since March 29 – and on track to break a six-week decline.
Bitcoin has held between $60,000 and $70,000, minus a couple of swings above and below that range, since March, when it hit new all-time highs and then quickly retreated. Investors and analysts expected the cryptocurrency to do so remain rangebound for several more monthsstrong catalysts absent.
— CNBC’s Jeff Cox and Nick Wells contributed reporting.