Bitcoin (BTC) prices dipped after hotter-than-expected inflation data from the US sparked concerns about delayed interest rate cuts from the Federal Reserve. The leading cryptocurrency fell as much as 5% after reaching a new all-time high of $73,005 on Tuesday, before recovering slightly to trade above $71,000. The February Consumer Price Index (CPI) report showed inflation remained stubbornly high at 0.4%, exceeding analyst predictions. This pushed the year-on-year inflation rate to 3.2%, higher than the estimated 3.1%, further dampening hopes of an imminent rate cut.
Market participants are now placing a 1% chance of the Fed lowering rates in March, compared to 15% just a month ago. Instead, expectations shifted towards the possibility of the Fed holding rates steady in the first half of 2024, with a potential cut only coming in June or later.
While inflation concerns triggered a sell-off, ongoing inflows into spot Bitcoin ETFs helped mitigate the losses. These inflows, totaling around $3.68 billion over the past week, provided some support for the cryptocurrency’s price. Notably, Blackrock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund continue to lead the pack, holding $14.76 billion and $9.26 billion worth of Bitcoin respectively.
The fight against inflation appears to be far from over. With the possible delay in rate cuts from the Federal Reserve, its impact on Bitcoin’s price and the wider crypto markets is still uncertain.
