US Inflation Data Triggers Bitcoin Value Dip; Grayscale Trust Sees Significant Outflow
Summary:
Bitcoin (BTC) experienced a quick drop in value at the Feb. 13 Wall Street opening due to unsettling U.S. inflation data. Surpassing predictions, the January Consumer Price Index (CPI) negatively affected BTC, driving a 3.8% price reduction on the day. As a result, the possibility of a Federal Reserve interest rate decrease shifted from March to later this year. Inflows into Bitcoin spot exchange-traded funds (ETFs) failed to stabilize Bitcoin’s value, despite positive ETF flow trends. However, the Grayscale Bitcoin Trust (GBTC) saw an outflow of around 2,400 BTC.
The opening of Wall Street on Feb. 13 saw a swift downturn in Bitcoin (BTC) value, owing to U.S. inflation data causing problems for risk assets. The BTC/USD 1-hour chart demonstrated a 3.8% decline in BTC price, touching a low point of $48,435 on Bitstamp. The January Consumer Price Index (CPI) outstripped projections, triggering a negative reaction from Bitcoin. The month-on-month CPI arrived at 0.3%, while the annual figure was marked at 3.1%, surpassing respective predictions by 0.1% and 0.3%.
The shelter index continued to rise in January, accounting for over two-thirds of the overall increment in monthly items. Food costs also rose 0.4% in January, with the prices for home-cooked and restaurant meals increasing by the same rate. However, the energy experience a 0.9% drop, primarily because of a decrease in the gasoline index, according to an official statement from the U.S. Bureau of Labor Statistics.
As a result, markets began to reconsider the probability of an interest rate reduction by the Federal Reserve, pushing the expected time from March to later in the year. CME Group’s FedWatch Tool currently indicates an 8.5% chance of a March rate cut, down from 17.5% on Feb. 12.
The Kobeissi Letter, a trading resource, noted that the latest inflation figures ended up being hotter than anticipated. Core CPI was expected to drop, but it didn’t, and CPI inflation exceeded projections by 20 basis points. As a result, it concluded that a March Federal Reserve rate cut would likely not happen—a move that would have potentially boosted the performance of risk assets like cryptocurrencies.
The return of inflows into Bitcoin spot exchange-traded funds (ETFs) did not do much to stabilize Bitcoin’s price. Despite this, Daan Crypto Trades, a popular trader, pointed out that the trends for ETF flows were still positive as they were now putting up the BTC supply twelve times quicker than freshly minted coins come onto the market.
Grayscale Bitcoin Trust (GBTC), however, experienced outflows that amounted to approximately 2,400 BTC ($117 million), as reported by Arkham, a crypto intelligence firm. Last week saw, for the first time in almost three years, the GBTC’s net asset value—a measure of the share price relative to Bitcoin—flip to positive.
Published At
2/13/2024 6:11:13 PM
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