Key Points
- Bitcoin’s price fell below $69,000 prior to the release of U.S. inflation data.
- The potential for a rate cut by the U.S. Federal Reserve might be influenced by the inflation data.
The price of Bitcoin (BTC) dropped beneath $69,000 on Wednesday, ahead of the U.S. inflation data announcement.
The U.S. Bureau of Labor Statistics is scheduled to announce the Consumer Price Index (CPI) for March 2024 later in the day. Inflation is projected to rise at a yearly rate of 3.4% in March, which is faster than the 3.2% increase recorded in February.
Influence on Federal Reserve’s Rate Cut
If the data indicates a milder inflation for March, it could potentially affect the likelihood of a rate cut by the U.S. Federal Reserve in the first half of 2024. The CME’s FedWatch tool reveals that interest rate traders are 93.7% certain that the Fed will maintain rates steady in May. However, the market now anticipates a 50.8% chance of a rate cut at the June Federal Open Market Committee meeting.
Stock Futures and Bitcoin Performance
Stock futures saw a slight increase on Wednesday morning, prior to the crucial U.S. inflation data. Futures linked to the Dow Jones Industrial Average rose by 44 points, which is a 0.1% increase in early morning trading.
In addition, the S&P 500 closed a bit higher on Tuesday, gaining 0.13%, while the Nasdaq saw a 0.32% increase at the end of yesterday’s trading session. Bitcoin generally closely follows risk-asset trends seen in indices like the Nasdaq and the S&P 500. However, in the past 24 hours, the digital asset has been showing a contrary performance to these trends.
The inflation data follows the U.S. Labor Department’s release of employment figures for March last Friday. The data revealed that U.S. employers added 303,000 jobs, surpassing expectations and indicating that the labor market remains strong despite higher interest rates.
The numbers were significantly stronger than the 200,000 job gains economists had predicted. Because of the robust employment data and resilient economic activity, the Fed may be able to maintain unchanged rates for a longer period.
Low unemployment and strong job growth can lead to upward pressure on wages and prices, potentially contributing to inflation. In such a scenario, the Fed may be more inclined to consider keeping interest rates steady rather than cutting them to prevent the economy from overheating.
The largest digital asset by market capitalization decreased by around 2% in the past 24 hours and was changing hands for $68,966 at 5:50 a.m. ET. The GM 30 Index, representing a selection of the top 30 cryptocurrencies, has decreased by 2.97% to 146.95 in the past 24 hours.
