Bitcoin (BTC) experienced a 2.3% decline after the opening of Wall Street on March 12. This drop was in response to the persistently high inflation in the United States and its potential impact on interest rate cuts in 2024.
According to data from Cointelegraph Markets Pro and TradingView, BTC fell by as much as 6% after reaching a new all-time high of $73,054 on March 12. It bottomed out at $68,636 on Bitstamp.
The price of BTC reacted to the February Consumer Price Index (CPI) data, which came in higher than expected at 0.4% in February, according to the U.S. Bureau of Labor Statistics (BLS). The year-on-year rate rose to 3.2%, surpassing estimates of 3.1% and January’s 3.1%.
The BLS official release stated that rising costs of shelter and gasoline contributed more than 60% to the monthly increase in the all-items CPI index.
Following the release of the CPI data, market participants began discussing the possibility of the Federal Reserve reducing interest rates in the coming months. According to the CME’s FedWatch tool, traders currently estimate a 1% chance of a rate cut in March, compared to 15% on February 12. This suggests that market participants believe the U.S. central bank will keep rates steady in March and May, with the first possible rate cut in June.
JPMorgan Chase CEO Jamie Dimon expressed his preference for the Fed to delay the decision to cut rates until later in the year. Speaking at the Australian Financial Review business summit in Sydney, Dimon emphasized the importance of making decisions based on data and warned that rates may remain high for some time.
In a post on the X social media platform, trading resource The Kobeissi Letter questioned the notion that inflation was gone, citing a significant jump in the inflation of core services excluding shelter in February.
Despite the inflation concerns, the continued inflows into spot Bitcoin exchange-traded funds (ETFs) are helping to mitigate the sell-off driven by inflation. As of now, the price of Bitcoin has recovered above $71,000. Inflows into spot Bitcoin ETFs reached around “55.78K BTC ($3.68B) of inflows” in the past week, according to data from crypto intelligence firm Arkham.
Market analysts also noted positive trends in increasing ETF flows, with “half a billion of net inflows” on March 11. Notably, BlackRock’s iShares Bitcoin Trust, IBIT, holds the most Bitcoin with a value of $14.76 billion. Fidelity’s Wise Origin Bitcoin Fund, FBTC, follows closely with over $9.26 billion in BTC under management.
On the other hand, Grayscale Bitcoin Trust, GBTC, has seen outflows totaling $11.04 billion in the past eight weeks. The fund experienced $494.1 million in outflows on March 11, the highest daily volume of capital withdrawals since January 23.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.