Bitcoin (BTC) price recorded a major decline on Wednesday as the US Consumer Price Index data came in hot. The CPI showed a faster than expected climb in March. BTC price trading around $70,000 went on to drop to the $67,000 price level in reaction to hotter CPI data.
US CPI data comes in hot
As per the data, the US CPI rose to 0.4% on a monthly basis in March, while, the year over year (YO) inflation rate reached 3.5%, up from February’s level. However, the economists were expecting a 0.3% growth in March and a 3.4% growth YoY. This data suggests sustained inflationary momentum.
The global digital asset industry was already dealing with the high selling pressure in anticipation of higher CPI data. The cumulative market cap has dropped by around 5% over the last day to stand at $2.53 trillion. Its 24 hour trading volume is still up by 2% to stand at $95.83 billion.
Bitcoin and Ethereum, the two biggest crypto, prices dropped by 4% and 5%, respectively in the last 24 hours. BTC is trading at an average price of $67,603, at the press time, while, Ethereum went on to dip to the $3,400 price level.
Bitcoin Cash (BSH) turned out to be one of the biggest losers as its price had dropped by 11% in the last 24 hours. BSH is trading at an average price of $610.86, at the press time. Meanwhile, dogwifhat (WIF) become the biggest loser by shedding 15% of its value.
What to expect next?
All of this action comes in with core CPI accelerating by 0.4% on a monthly basis which has exceeded expectations. However, YoY core CPI rose by 3.8% which indicates broad based inflationary trends.
The inflation had arrived amid increased uncertainty in the markets. Cautious sentiments are running among Federal Reserve officials regarding monetary policy.
It is important to note that despite calls for patience on rate cuts, expectations for three reductions this year persist in the futures market. Several Fed officials have also expressed skepticism about the need for rate cuts. They have suggested an expectation for only one cut this year. Some even suggest the possibility of rate increases if data do not align with expectations.
The Stock market futures have also declined, while Treasury yields had spiked higher following the release of the CPI report. This directly reflects concerns about inflation and its implications for Fed policy.
