Bitcoin, the most valuable cryptocurrency with the biggest market size, experienced a significant drop in price and reached a low of $67,482 on the Bitstamp trading platform recently.
For the third month in a row, the annual rate of increase in the main consumer price index (CPI) surprised experts by coming in at 3.5%. This figure represents the growth in consumer prices when compared to the same period last year, and it surpassed what analysts had predicted for March.
According to Jason Furman, a professor at Harvard, the latest data contradicted the notion that January’s economic trends were just a seasonal quirk.
Bitcoins‘ price dropped in sync with U.S. stocks. The S&P 500’s major sectors suffered substantial losses, while the Russell 2000, specializing in small-cap stocks, had one of its most disappointing days this year.
Apollo Global Management has pointed out that the Federal Reserve isn’t finished combating inflation, implying longer durations for elevated interest rates.
Significantly, the probability of a June interest rate reduction for futures traders stands at approximately 18%. It’s widely anticipated that the Federal Reserve will reduce rates less than twice in total throughout this year. Unfortunately for riskier assets like Bitcoin, this outlook may not be favorable.
The bigger picture
Although the current situation may appear unfavorable, Matt Hougan, the CIO of Bitwise Invest, holds a different perspective. He emphasizes that there are other significant elements influencing Bitcoin’s future pricing. According to him, Bitcoin ETF inflows and the expanding deficit play crucial roles in shaping Bitcoin’s long-term value trends.
He expressed doubt about the impact of the CPI causing a fade in prices, stating that the Fed’s decision to reduce rates by 0.25% in June is a minor influence on bitcoin prices currently. Instead, other factors are more significant for the cryptocurrency’s long-term price trend. (Paraphrased from “He’s not convinced that the CPI causing a fade will affect bitcoin prices. The Fed’s rate cut decision in June isn’t the primary determinant of bitcoin prices at this moment; it’s just a minor factor.”)
Bitcoin is currently trading at the $68,660 level after paring some losses.
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2024-04-10 18:22