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Bitcoin drops $4.3K as CPI data comes in hotter than expected

News Feed - 2024-03-13 07:03:53

Nancy Lubale1 hour agoBitcoin drops $4.3K as CPI data comes in hotter than expectedMarkets reacted to stubbornly high inflation in the United States and its potential impact on the Fed’s interest-rate plans.1325 Total views2 Total sharesListen to article 0:00Market AnalysisOwn this piece of crypto historyCollect this article as NFTJoin us on social networksBitcoin (BTC) witnessed a 2.3% drop after Wall Street opened on March 12, as markets reacted to stubbornly high inflation in the United States and its implications for interest rate cuts in 2024.BTC/USD daily chart. Source: TradingViewInflation still high following hot CPI data


Data from Cointelegraph Markets Pro and TradingView shows BTC dropped as much as 6% after setting a higher all-time high at $73,054 on March 12, bottoming at $68,636 on Bitstamp.


BTC price reacted to the February Consumer Price Index (CPI) data, which came in higher than expected at 0.4% in February, according to data from the U.S. Bureau of Labor Statistics (BLS). The year-on-year rate climbed to 3.2%, compared to estimates of 3.1% and January’s 3.1%.


According to BLS’ official release, rising shelter and gasoline costs contributed more than 60% to the monthly increase in the all-items CPI index.CPI % change chart. Source: U.S. Bureau of Labor StatisticsFed rate cuts in 2024?


Immediately after the release of the CPI data, market participants began debating the possibility of the Federal Reserve lowering interest rates in the coming months.


According to the CME"s FedWatch tool, traders are placing the odds of a March rate cut at just 1% at the time of writing versus 15% on Feb. 12. This means market participants are betting that the U.S. central bank will hold rates steady in March and May with the first possible cut being made in June.CPI % change chart. Source: U.S. Bureau of Labor Statistics


JPMorgan Chase CEO Jamie Dimon said he preferred the Fed delaying the decision to cut rates until later in the year.


Speaking at the Australian Financial Review business summit in Sydney, Dimon said,“You can always cut it quickly and dramatically, … their (the Fed) credibility is a little bit at stake here; I would even wait past June and let it all sort it out.”


He warned that the rates may remain higher for some time, adding that any decision by the Fed should be based on data.


“Thought inflation was gone?” trading resource The Kobeissi Letter wrote in part in a March 12 post on X social media platform. 


Related:Bitcoin has 6 months until ETF ‘liquidity crisis’ — New analysis


Kobeissi shared the following chart, saying the inflation of core services excluding shelter “jumped by 0.7% month-over-month, the biggest jump since September 2022.” In February, this metric “was up another 0.5% month-over-month after multiple increases in 2023.”“The fight against inflation is far from over.”BLS CPI Core Services less housing. Source: @KobeissiLetter/XInflation data eclipsed by ETF inflows and upcoming halving


The continuation of inflows into the spot Bitcoin exchange-traded funds (ETFs), meanwhile, is helping to abate an inflation-driven sell-off.


The price of the flagship cryptocurrency had recovered back above $71,000 at the time of writing, as the last week’s inflows into the spot Bitcoin ETFs totaled around “55.78K BTC ($3.68B) of inflows,” according to data from crypto intelligence firm Arkham.


Sharing data from Farside Investors on X, market analysts acknowledged positive trends of increasing ETF flows, with “half a billion of net inflows” on March 11.


“Blackrock with a solid $562 million, Fidelity with $215 million. I guess the biggest surprise is @vaneck_us with 118.8 million, almost doubling the amount they had gathered in the last 2 months in a single day,” read the post.“$GBTC being a little bitch again with $494 million outflows. Thanks, Barry. They"re now setting below 400k Bitcoin.”Bitcoin ETF flow table. Source: Farside Investors


BlackRock’s iShares Bitcoin Trust, IBIT, leads the pack holding Bitcoin worth $14.76 billion. Fidelity’s Wise Origin Bitcoin Fund, FBTC, comes in second with over $9.26 billion in BTC under management.


The ARK 21Shares Bitcoin ETF, ARKB, closes the top three funds, holding about $1.8 billion worth in its portfolio.Spot Bitcoin ETF inflows and assets under management  source: @BitMEX Research


Meanwhile, outflows from Grayscale Bitcoin Trust, GBTC, totaled $11.04 billion over the past eight weeks. The fund recorded $494.1 million in outflows on March 11, its highest daily volume of capital withdrawals since Jan. 23.


This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.# Bitcoin# Cryptocurrencies# Bitcoin Price# Cryptocurrency Exchange# BTC Markets# Market Analysis# RegulationAdd reactionAdd reaction