Bitcoin slumps by $4.3K due to CPI data exceeding expectations

Bitcoin (BTC) experienced a 2.3% decline when Wall Street opened on March 12 due to concerns over high inflation in the United States and its potential impact on future interest rate cuts. After reaching a new all-time high of $73,054, BTC dropped by as much as 6%, hitting a low of $68,636 on Bitstamp. The drop in BTC price was influenced by the release of the February Consumer Price Index (CPI) data, which revealed a higher-than-expected increase of 0.4% in February. The year-on-year rate rose to 3.2%, surpassing estimates and January’s rate of 3.1%. The rise in shelter and gasoline costs contributed significantly to the overall increase in the CPI index. Following the release of the CPI data, there was speculation among market participants about the possibility of the Federal Reserve cutting interest rates in the coming months. However, traders are currently placing low odds on a rate cut in March, suggesting that the central bank will likely maintain steady rates until June. JPMorgan Chase CEO Jamie Dimon advised delaying the decision to cut rates until later in the year, emphasizing that any decision by the Fed should be data-driven. Despite the concerns over inflation, inflows into spot Bitcoin exchange-traded funds (ETFs) have helped mitigate the sell-off driven by inflation. The price of Bitcoin has already recovered above $71,000, with significant inflows into ETFs in the past week. BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund are among the leading funds in terms of Bitcoin holdings. On the other hand, Grayscale Bitcoin Trust has seen significant outflows in recent weeks. It is important to note that this article does not provide investment advice and readers should conduct their own research before making any investment decisions.