Bitcoin Price Weakens as CPI Print Raises Doubt on Fed Rate Cuts

The price of Bitcoin experienced a slight decrease of 0.5% when the Wall Street opened on April 10. This drop was in response to the release of the United States Consumer Price Index (CPI) report, which showed higher-than-expected figures. The data from Markets Pro and TradingView revealed that the price dropped by as much as 2.5% from its opening at $69,115 to a low of $67,463 on Coinbase.

The movement in Bitcoin’s price was influenced by the CPI data for March, which surpassed expectations. Inflation rose by 0.4% on a monthly basis and 3.5% on a yearly basis. These figures were higher than the estimates of a 0.3% monthly increase and a 3.4% yearly increase from economists surveyed by Dow Jones. The Core CPI, which excludes volatile food and energy prices, increased by 0.4% from February and 3.8% from a year ago, compared to estimates of 0.3% and 3.7%, respectively. The CPI increased by 3.2% annually for all items.

The possibility of the Federal Reserve lowering interest rates in the coming months became a topic of discussion among market participants. The odds of a rate cut in June dropped to 20.6%, while the odds for a cut in September increased to 45.9%. Traders are now betting that the Federal Reserve will hold rates steady in May and June, with the first potential cut happening in September. This shift in timing led to a decrease in the number of interest rate cuts anticipated by the market.

Inflows into spot Bitcoin exchange-traded funds (ETFs) have also been slowing down, which is affecting the short-term outlook for Bitcoin investors. On April 9, there were outflows of around $154.9 million from the Grayscale Bitcoin Trust (GBTC), and Spot Bitcoin ETFs saw net outflows of $18.7 million for the second consecutive day. BlackRock’s iShares Bitcoin Trust had the highest inflow of $128.7 million, followed by Bitwise’s ETF with over $3.8 million in inflows.

Despite the decrease in spot Bitcoin ETF inflows, the market remains optimistic about the future of Bitcoin. The upcoming halving event, which is less than ten days away, is expected to have a positive impact on the price of Bitcoin. Investors believe that it could lead to new all-time highs for Bitcoin and have a positive effect on other assets as well. As a result, there is anticipation of a reinitiation of the bull market in the latter half of the second quarter.