Bitcoin dipped below the $69,000 mark on Wednesday, anticipating the release of U.S. inflation data.
The U.S. Bureau of Labor Statistics is scheduled to unveil the Consumer Price Index (CPI) for March 2024 later today. Projections indicate that inflation is poised to climb at an annual rate of 3.4% in March, outpacing February’s 3.2% uptick.
However, should March’s inflation figures reveal a softer reading, it could influence expectations regarding a potential rate cut by the U.S. Federal Reserve in the first half of 2024.
According to the CME’s FedWatch tool, interest rate traders are highly confident, at 93.7%, that the Fed will maintain rates unchanged in May. Nevertheless, the market is now pricing in a 50.8% likelihood of a rate cut at the June Federal Open Market Committee meeting.
Stock futures edged up ahead of the CPI release, with futures linked to the Dow Jones Industrial Average gaining 44 points, signaling a 0.1% uptick in early morning trading.
Additionally, the S&P 500 closed marginally higher on Tuesday with a 0.13% increase, while the Nasdaq observed a 0.32% rise at the close of yesterday’s trading session.
Bitcoin typically mirrors the trends of risk assets such as the Nasdaq and the S&P 500. However, in the last 24 hours, the digital currency has shown a contrary performance to these indices.
The inflation data follows the release of March employment figures by the U.S. Labor Department last Friday. The report revealed that U.S. employers added 303,000 jobs, surpassing expectations and signaling continued strength in the labor market despite higher interest rates.
These figures exceeded economists’ forecasts of 200,000 job gains. With robust employment data and resilient economic activity, the Fed may opt to maintain unchanged rates for an extended period.
Low unemployment and robust job growth can exert upward pressure on wages and prices, potentially contributing to inflation. In such a scenario, the Fed may lean towards keeping interest rates steady rather than cutting them to prevent the economy from overheating.
The largest cryptocurrency by market capitalization experienced a roughly 2% decline in the past 24 hours, trading at $68,966 at 5:50 a.m. ET, according to The Block’s Price Page. The GM 30 Index, representing a basket of the top 30 cryptocurrencies, also decreased by 2.97% to 146.95 within the same period.
