Bitcoin
Bitcoin (BTC) price rises more than 1% after moderate inflation data
The monthly pace of U.S. inflation slowed a bit in April, according to the government’s Consumer Price Index (CPI), rising 0.3% versus 0.4% in March and economists’ forecast of 0.4% .
The rest of the report also showed small declines that were in line with expectations. On an annual basis, the CPI was higher by 3.4%, compared to estimates of 3.4% and 3.5% in March. Core CPI – which excludes food and energy costs – increased by 0.3% in April , against estimates of 0.3% and 0.4% in March; On an annual basis, the core CPI was 3.6% higher, compared to forecasts of 3.6% and 3.8% in March.
The price of bitcoin (BTC) jumped more than 1% in the minutes following Wednesday morning’s report, rising to $63,700. With the spot ETF catalyst sidelined in recent weeks as inflows have slowed or even reversed, the price of bitcoin has been under pressure with the idea that interest rates would remain higher for longer.
The consistent fall in inflation in 2023 has led most, including the US Federal Reserve, to expect significantly easier monetary policy throughout the year into 2024. Instead, inflation has risen a bit so far this year. Coupled with an economy that continues to grow, it puts to rest the idea of any imminent central bank rate cuts. In Wednesday’s CPI report, odds of a summer rate cut by the Fed were low and traders predicted only a 50% probability of a move in September, according to the CME FedWatch Tool.
Coming at the same time as the inflation figures, April’s retail sales data showed a flat reading against forecasts for a 0.4% rise and March’s 0.6% rise. Retail sales excluding automobiles increased 0.2% in April, in line with expectations but below March’s 0.9%.
A check of traditional markets reveals a positive reaction to weak inflation and economic data, with S&P 500 futures up 0.5% and the 10-year Treasury yield falling seven basis points to 4.37%. The US dollar index fell 0.5% and gold rose 0.7%.