Bitcoin Sees Best Day Since March After Colder April Inflation Reading

Bitcoin surged with stocks on Wednesday after the April consumer price index showed inflation had eased from the previous month.

The cryptocurrency’s price rose more than 7% to $66,124.59, according to Coin Metrics, and its best day since March 25. It also traded above its 50-day moving average for the first time since April 13.

“The slightly lighter-than-expected CPI reading slightly increased the chances of a rate cut, which still has a strong influence on the price of Bitcoin,” Oppenheimer analyst Owen Lau told CNBC. “After the ETF halving, the next major catalyst is a rate cut. Bitcoin will likely remain range-bound and trade based on macroeconomic data, until we see a clearer path for the halving rates.”

The consumer price index, a broad measure of the cost of goods and services at checkout, rose 0.3% from March, the Labor Department’s Bureau of Labor Statistics reported Wednesday. This was slightly below the Dow Jones estimate of 0.4%. Consumer prices continue to increase by 3.4% compared to last year.

“With US core CPI cooling for the first time in six months, we could see a resumption of investor appetite for risk assets like crypto, sparking more flows into Bitcoin spot ETFs , which have been particularly quiet in the past week,” said Leena ElDeeb, an analyst at 21Shares.

“Even if rate cuts remain in question, the recovery could be slow,” she added. “Typically, higher interest rates make risky assets such as tech stocks and bitcoin less attractive because investors can earn substantial returns through safer options such as U.S. Treasuries. “

Bitcoin is in a unique position as a risk-free and risk-free asset, and many investors have a long-term view of the crypto asset, ElDeeb explained, adding that while Fed policies may induce volatility in the Bitcoin in the short term, it does not fundamentally change the long-term trajectory of Bitcoin.

Lately, Bitcoin has been more heavily influenced by macroeconomic factors, with industry catalysts such as the launch of Bitcoin exchange-traded funds and the halving in the rearview mirror. Earlier this week, Bitcoin also missed a two-day resurgence in the meme stock craze.

With Wednesday’s gain, bitcoin is now up 8.92% for the week – its best week since March 29 – and is on track to break a six-week decline.

Bitcoin has been hovering between $60,000 and $70,000 — minus a few points above and below that range — since March, when it hit new all-time highs and quickly pulled back. Investors and analysts expected the cryptocurrency to remain constrained for several more months in the absence of strong catalysts.

— CNBC’s Jeff Cox and Nick Wells contributed reporting.