Bitcoin Soars to $63.7K as U.S. Inflation Rates Ease in April
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April saw slight declines in both headline and core inflation rates.
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There was also a noted softness in retail sales data for April.
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Amid prevailing concerns about prolonged higher interest rates, bitcoin’s price surged by more than 1% upon the news release.
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According to the latest data from the government’s Consumer Price Index (CPI), the monthly inflation rate in the U.S. slightly eased in April, rising by 0.3%, compared to the 0.4% increase in March and in line with economist forecasts of 0.4%.
The comprehensive report highlighted small declines consistent with expectations. Annually, CPI rose by 3.4%, meeting estimates and lower than March’s 3.5%. Core CPI, which excludes volatile food and energy prices, also increased by 0.3% in April, matching projections and down from 0.4% in March. Year-over-year, core CPI went up by 3.6%, aligning with forecasts but lower than March’s 3.8% increase.
Following the Wednesday morning report, the price of bitcoin (BTC) spiked by over 1%, reaching $63,700. The earlier momentum of a spot ETF catalyst has been muted for several weeks due to inconsistent inflows, causing bitcoin’s price to feel the pressure from concerns that interest rates might remain elevated for an extended period.
The ongoing decrease in inflation throughout 2023 has led many, including the U.S. Federal Reserve, to anticipate significantly easier monetary policies by 2024. However, inflation has slightly rebounded this year. Coupled with a growing economy, this has quelled any immediate expectations for rate cuts by the central bank. Prior to Wednesday’s CPI report, the likelihood of a summer rate cut by the Fed was minimal, with traders pricing in only a 50% chance of a move in September based on the CME FedWatch Tool.
Coinciding with the inflation data, April’s retail sales report indicated a flat reading against expectations for a 0.4% rise and March’s 0.6% increase. Excluding autos, April’s retail sales rose by 0.2%, matching forecasts but falling from March’s 0.9% rise.
Traditional markets responded positively to the softer inflation and economic data: S&P 500 futures gained 0.5%, the 10-year Treasury yield decreased by seven basis points to 4.37%, the U.S. dollar index dropped by 0.5%, and gold prices increased by 0.7%.
