Key Points
- Bitcoin’s price dropped 0.5% in response to higher-than-expected figures in the U.S. Consumer Price Index report.
- Investors are speculating about potential changes in the Federal Reserve’s interest rates, while inflows into Bitcoin ETFs are slowing down.
On April 10, the price of Bitcoin (BTC) fell by 0.5% at the opening of Wall Street. This was in response to the U.S. Consumer Price Index report which indicated higher-than-expected figures.
The Impact of CPI Data
The BTC price dipped as much as 2.5% from the opening at $69,115 to an intra-day low of $67,463 on Coinbase. This was in reaction to the March Consumer Price Index (CPI) data, which surpassed expectations.
Inflation in March increased by 0.4% month-on-month and 3.5% year-over-year. This was higher than the 0.3% monthly increase and 3.4% year-over-year estimates from the Dow Jones economists survey. CPI increased at an annual rate of 3.2% for all items in March.
Market Speculation
The surprising CPI data sparked discussions among market participants about the potential for the Federal Reserve to lower interest rates later in the year. According to the CME’s FedWatch tool, traders are placing the odds of a June rate cut at just 20.6% at the time of writing versus 45.9% for September.
This implies that market analysts are betting that the U.S. Federal Reserve will keep rates steady in May and June, with the first possible cut being made in September. The Kobeissi Letter noted that this is the first time in history that markets are “pricing in less rate cuts” than the guidance given by the FED.
However, the tapering off of inflows into the spot Bitcoin exchange-traded funds (ETFs) is dampening the short-term outlook of Bitcoin investors. April 9 outflows from the Grayscale Bitcoin Trust (GBTC) totaled around $154.9 million.
Overall, spot Bitcoin ETFs saw net outflows of $18.7 million, marking the second consecutive day of negative inflows. Despite this, the market remains optimistic about the BTC’s upside potential after the Bitcoin halving event, which is less than ten days away.
Vijay Pravin Maharajan, founder and CEO of bitsCrunch, recognizes the importance of the upcoming miner reward halving event. He suggests that it could “not only propel BTC to new all-time highs but also positively impact various other assets.”
