Bitcoin's Value Dips Following Unexpected U.S. Inflation Rise; Spotlight on Upcoming Halving Event
Summary:
As the U.S. Consumer Price Index report showed higher-than-anticipated figures, Bitcoin's value dropped 0.5% at the Wall Street open on April 10. This fall in Bitcoin was influenced by March's unexpected inflation rise. The situation led market players to speculate about a possible reduction in interest rates by the Federal Reserve. The lower interest in Bitcoin exchange-traded funds (ETFs) could indicate caution among investors. Despite the current situation, market observers remain optimistic about Bitcoin's potential for growth after the upcoming halving event.
On April 10, with the opening of Wall Street, Bitcoin's (BTC) value experienced a 0.5% decrease, influenced by the higher-than-anticipated figures released in the U.S. Consumer Price Index report. The latest statistics from Cointelegraph Markets Pro and TradingView revealed that the value of BTC plummeted by up to 2.5% from an opening figure of $69,115 on April 10 to reach an intra-day trough of $67,463 on Coinbase.
The decrease in Bitcoin's value is largely attributed to the unexpected rise shown in the March Consumer Price Index (CPI) data. Inflation in March saw a 0.4% upswing month-to-month and 3.5% year-to-year, as opposed to the anticipated 0.3% monthly and 3.4% annual estimates by Dow Jones economists.
The core CPI, which strips out unpredictable energy and food costs, exhibited a 0.4% rise from February, and experienced a 3.8% increase from the previous year, compared to the 0.3% and 3.7% forecasts, respectively. For all items, the CPI experienced a 3.2% annual increase in March.
According to an official report from the U.S. Bureau of Labor Statistics, the most significant contributors to the March increase were the indexes for shelter and gasoline. Other contributing factors included a 1.1% rise in the energy index and a modest increase in the food index of 0.1%.
Following this report, market players began to explore the likelihood of the Federal Reserve reducing interest rates in the coming months. As per CME's FedWatch tool, prospects of a rate reduction in June were placed at a scant 20.6%, while September chances rose to 45.9%. This suggests that most market observers foresee the U.S. Federal Reserve maintaining stable rates in May and June, with the first potential decrease coming in September.
The aftermath of the CPI report also brought a significant drop in interest rate futures, which are now pricing in a mere two interest rate cuts for all of 2024. Interest in spot Bitcoin exchange-traded funds (ETFs) is lessening, thus dimming the short-term projections of Bitcoin investors.
Outflows from the Grayscale Bitcoin Trust (GBTC) on April 9 totaled approximately $154.9 million, with overall spot Bitcoin ETFs seeing net outflows of $18.7 million. This marked the second day in a row of negative inflows.
Despite these numbers, the market maintains a positive outlook regarding BTC’s potential growth following the Bitcoin halving event, occurring in less than ten days. Vijay Pravin Maharajan, founder and CEO of bitsCrunch, underlined the significance of the upcoming event, stating that it could not only push BTC to unprecedented highs but also have an uplifting effect on various other assets.
Published At
4/10/2024 8:24:30 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.