0
0
Bitcoin Price Drops After Hotter-Than-Expected Inflation Data
Bitcoin has experienced a decline in value following the release of reports indicating that February’s inflation rates surpassed initial predictions. The foremost digital asset, boasting the highest market capitalization, has seen a decrease of almost 3% in value over the span of 24 hours, as reported by CoinGecko. Currently, the price per coin stands at $70,920. During the same period, Bitcoin briefly reached a new record high slightly exceeding $73,700.
Producer Price Index Exceeds Expectations
Data from the Bureau of Labor Statistics within the Labor Department has revealed that the producer price index surged by 0.6% last month, outpacing the anticipated rise of 0.3%. This unexpected increase suggests that inflation remains a persistent concern in the current economic climate. The producer price index functions as a metric to monitor changes in pricing subsequent to goods leaving the manufacturing stage, making it a crucial gauge for inflationary trends.
Impact on Stock Markets
The initial reaction of the stock market was relatively subdued, however, subsequent shifts saw declines. Notably, the S&P 500 experienced a decrease of 0.2%, alongside a nearly 0.2% drop in the tech-focused Nasdaq. Likewise, the Dow Jones Industrial Average indicated a decline of roughly 0.3%. U.S. equities, particularly tech-related shares, are categorized as “risk assets” and traditionally react negatively to heightened inflation metrics, aligning closely with the behavior of cryptocurrencies.
Speculation Surrounding Federal Reserve Actions
Investors are speculating that the Federal Reserve might consider lowering interest rates by May in response to escalating inflation rates. However, such a decision may be postponed if inflation remains unyielding within the top-ranking global economy. Industry experts have suggested that a reduction in interest rates could potentially propel the price of Bitcoin to further heights.
Decrypt reported that the recent surge in Bitcoin and the broader cryptocurrency market materialized subsequent to the approval of spot Bitcoin exchange-traded funds (ETFs) in January. These financial instruments allow investors to gain exposure to Bitcoin without necessitating direct ownership or storage of the digital asset. The ETFs have garnered significant inflows and exhibited substantial trading volumes, with cumulative net inflows across the ten ETFs surpassing $1 billion for the week. As of now, the combined assets under management for these funds exceed $60 billion.
Image/Photo credit: source url
