Bitcoin price weakened after the publication of the fresh CPI raises doubts about the Fed rate cut
Bitcoin (BTC) fell 0.5% at the April 10 open on Wall Street, as markets reacted to the US Consumer Price Index posting better-than-expected numbers.
A June rate cut by the Federal Reserve is likely after today's CPI publication.
According to data from Cointelegraph Markets Pro and TradingView, the price of BTC is down as much as 2.5% from an April 10 opening of $69,115, down from an intraday low of $67,463 on Coinbase.
Bitcoin price reacted to March Consumer Price Index (CPI) data, which came in higher than expected. Inflation rose 0.4% month-on-month and 3.5% year-over-year in March, up from estimates of a 0.3% monthly increase and 3.4% year-over-year increase from a survey of economists by Dow Jones.
Core CPI, which includes variable food and energy prices, rose 0.4% from February, up from 3.8% a year earlier, up from 0.3% and 3.7%, respectively. In March, the CPI for all goods rose at a 3.2% annual rate.
“The shelter index rose in March, as did the gasoline index. Together, these two indexes accounted for more than half of the monthly increase in the all-goods index. The energy index rose 1.1 percent for the month. The food index rose 0.1 percent in March. The U.S. Bureau of Labor Statistics An official press release read that food at home was unchanged, while food outside the home increased by 0.3 percent over the month.
Market participants immediately began to discuss the possibility of the Federal Reserve reducing interest rates in the coming months, changing their timing from June to the end of the year.
According to CME's FedWatch tool, traders are holding rates down just 20.6% in June, compared with 45.9% in September. That means market analysts are betting that the US Federal Reserve will hold rates in May and June, with the earliest likely to be in September.
“Interest rates are pricing in just 2 rate cuts for the entirety of 2024,” marketing source Kobeisi wrote in part in a response to the letter on X.
“The odds of a contraction in June fell from ~60% before the CPI report to ~22%.”
“This is the first time in history that markets have been depreciating rather than the Fed's guidance,” Kobeisi Letter added.
Although the inflation data will decrease in the coming half, the flow of Bitcoin ETF will maintain a negative position
Meanwhile, slowing inflows of Bitcoin exchange-traded funds (ETFs) into the space is dampening the short-term outlook of Bitcoin investors.
April 9 withdrawals from Greyscale Bitcoin Trust (GBTC) totaled around $154.9 million, according to data compiled by BitMEX Research.
Overall, the Spot Bitcoin ETF saw net inflows of $18.7 million, marking the second consecutive day of negative inflows.
BlackRock's iShares Bitcoin Trust, IBIT, had the highest total revenue of $128.7 million. Bitwise's ETF, BITB and Fidelity's Wise Origin Bitcoin Fund FBTC came in second and third with over $3.8 million and over $3 million respectively. There were no capital inflows to the remaining ETFs on April 10.
A slowdown in Bitcoin ETF flows comes as investors begin to be cautious, indicating that interest in investment products has waned. However, the market remains optimistic about BTC after the Bitcoin halving event, which is less than ten days away.
BitsCrunch founder and CEO Vijay Praveen Maharajan acknowledged the importance of the upcoming mining reward halving, noting that “in addition to pushing BTC to new all-time highs, it will positively impact various other assets.”
“Consequently, investors can expect the bull market to resume in the latter half of Q2.”
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
