Bitcoin Slips 2% After US Inflation Surprise
Bitcoin experienced a setback this week, with a 2 percent correction following a sell-off. This came after the release of US inflation data, which showed a higher-than-expected rate of 3.5 percent. Around $250 million flowed out of Bitcoin spot ETFs in the US over Monday and Tuesday.
The sell-off was likely triggered by the higher-than-anticipated inflation rate, which could lead to increased interest rates. The European Central Bank (ECB) has hinted at a significant increase in its key rates, currently at 4.25%, 3.75%, and 4.5% respectively. This poses a potential risk to the Bitcoin bull market, as higher interest rates make holding Bitcoin less attractive compared to other assets.
Jamie Dimon, CEO of JPMorgan, warned that the Federal Reserve could raise the prime rate to 8 percent due to persistent inflation. The probability of the Fed cutting interest rates in June is now less than 20 percent. Bitcoin gave up all its gains from Monday, falling below the $69,000 mark, which was the all-time high of the previous cycle.
The recent Bitcoin correction and sell-off underscore the influence of macroeconomic factors on cryptocurrency markets. With inflation rates higher than central bank targets and potential interest rate hikes on the horizon, investors are closely watching for signs of how these factors may continue to impact Bitcoin's price.
