Key Points
- Bitcoin’s price has increased in anticipation of US inflation data.
- The data could influence the Federal Reserve’s decision on lowering borrowing costs in 2024.
Bitcoin, the largest digital asset by market cap, has seen a rise in its value as traders eagerly await the release of inflation data from the United States. This information could play a crucial role in determining if and when the Federal Reserve will decide to reduce borrowing costs in 2024.
Bitcoin is currently maintaining a value above the $62,000 mark. It experienced nearly a 3% increase in the last 24 hours, trading at $62,815 at 5:02 a.m. ET.
US Economic Data
Recent economic data from the US indicates a slight deceleration in the national economy compared to the more robust conditions of 2023. The US employment data for April showed weaker growth than expected, a first in several months. If this trend continues, it could pressure the Federal Reserve to decrease rates to avoid a substantial economic downturn.
Investors are thus looking for confirmation about the continuation of inflation, which could provide more insight into the potential, timing, and overall probability of rate cuts this year.
Upcoming Inflation Readings
This week, the market will get a chance for more clarity with US inflation readings in the form of the Producer Price Index (PPI) on Tuesday followed by the Consumer Price Index (CPI) on Wednesday.
Before the release of this week’s inflation data, the CME’s FedWatch tool predicts a 24.6% likelihood of a rate cut at July’s Federal Open Market Committee (FOMC) meeting and a 48.6% chance at September’s meeting. Interest traders forecast a 96.5% chance that rates will remain unchanged at June’s meeting.
Analysts from QCP Capital stated, “Unless the Fed clearly rules out rate cuts or hints at rate hikes, it seems like the markets will continue to price in cuts. These expectations are likely to keep a bullish tone in the market for a while.”
