Bitcoin Rises Amid Sticky Inflation Data

Bitcoin’s price saw a notable increase following the release of U.S. inflation data for April, which indicated that inflation was more persistent than anticipated. According to the U.S. Bureau of Labor Statistics (BLS), consumer prices in April were 3.4% higher than last year, a slight decrease from March’s 3.7%.

Immediately after the BLS published its Consumer Price Index (CPI) report, Bitcoin’s price jumped to $63,142, marking a 3% rise over the past 24 hours, and a 1.4% increase within just an hour, as per CoinGecko data.

Ethereum, the second-largest digital asset by market cap, also experienced a rise, reaching $2,944.94. This represents a 1.8% increase from the previous day and a 2% rise within the past few hours.

The CPI report, a key indicator of inflation, tracks price changes across a broad range of consumer goods and services. The April data highlighted housing and gas prices as the primary contributors to the price increase. “Combined, these two indexes contributed over seventy percent of the monthly increase in the index for all items,” noted the BLS in its summary.

Initially, economists anticipated that the Federal Reserve might lower interest rates earlier this year. However, a recent Reuters survey suggests that a rate cut might not occur until September.

In the equities market, U.S. tech stocks showed positive momentum. The NASDAQ-100 Technology Sector Index (NDXT) gained 72 points, a 0.72% increase compared to the previous day, while the S&P 500 rose by 0.48% ahead of the U.S. market opening.

Bitcoin’s performance in March was buoyed by the approval of spot Bitcoin exchange-traded funds (ETFs) in January, which attracted significant capital into the market. However, persistent inflation data suggesting that the Fed may delay rate cuts has tempered the cryptocurrency’s surge. High interest rates typically lead investors to de-risk, often moving away from volatile assets like Bitcoin.

Consequently, Bitcoin has been trading below its 2021 record high of $69,044 for the past couple of months.

As inflation continues to challenge economic predictions and Federal Reserve actions, Bitcoin and other cryptocurrencies are navigating an environment where traditional finance intersects with digital asset dynamics. The crypto market remains responsive to macroeconomic indicators, highlighting its complex relationship with broader financial markets.