Bitcoin Price Drops Either Side of $64K After US Inflation Data

Last updated: April 26, 2024 5:24 pm EDT | 3 minutes reading

Bitcoin Price Drops Either Side of $64,000 After Latest US Inflation Report – Here’s What You Need to Know / Source: Cryptonews

Bitcoin (BTC) price fell on either side of the $64,000 level on Friday following the latest US inflation data report, which showed the Core PCE index rising 0.3% monthly in March. in line with market expectations.

A monthly inflation rate of 0.3% translates into an annualized inflation rate of around 3.6%. This is well above the Fed’s 2% inflation target, pointing to still uncomfortably high inflation in the US.

Economists highlighted that stubbornly high inflation in the real estate and utilities sector could keep monthly price pressures high for some time.

This will likely encourage the Fed will keep interest rates higher for longer. Given the strong data reports over the past few weeks (manufacturing PMI, jobs, etc.), it is no surprise to see DXY and US bond yields near multi-month highs.

The unfavorable macro scenario where markets are pricing in tighter inflation and a Fed that is more reluctant to cut rates signals a near-term headwind for Bitcoin.

Bitcoin has historically performed better in an environment of falling US yields and a falling US dollar.

However, there is some evidence that the US economy is slowing. This week’s PMI flash report showed weakness in economic activity in April. And the latest GDP numbers for the first quarter were a disappointment.

Until this weakness translates into lower inflation, the Fed will likely remain cautious about rate cuts, which will continue to be a headwind for Bitcoin.

Bitcoin price analysis – What’s next for BTC?

Bitcoin price is currently locked near the lower limits of its multi-week range between $60,000 and $74,000.

BTC has maintained this range despite recent macro and slowing ETF flows which registered US$217 million on Thursday.

Some cited strength in stablecoin growth as indicative of still strong flows in the crypto market.

According to Llama DeFiThe stablecoin market capitalization is at its highest level since June 2022 at $158 billion.

This represents an increase of $34 billion since the end of October, and continued growth could keep the price of Bitcoin elevated.

Any weakness in the stablecoin’s growth could be a harbinger of a lower Bitcoin price to come.

Currently, Bitcoin is at risk of falling below its low range around $60,000, which would open the door for a drop towards the $53,000 support.

Bitcoin (BTC) price remains at risk of a short-term drop south of $60,000. Source: TradingView

Bitcoin’s long-term bullish thesis remains

In the long term, however, most people are confident that Bitcoin will enter a bull market.

Last week we saw the fourth Bitcoin quadrennial halving take place. The cut in the BTC issuance rate from previous halvings without fail helped drive the price to new all-time highs within a few quarters.

Breaking from its previous historical pattern, Bitcoin reached all-time highs ahead of the halving this time thanks to ETF demand.

This undoubtedly increases the risk of a post-halving correction. But it should not harm long-term prospects.

The long-term trend remains towards greater TradFi adoption and investment in the asset, accelerated now by the availability of ETFs.

The macro will also be a big favorable factor in the long term. Unsustainable debt by major economies means that global currency devaluation is likely to continue.

Amidst the growing narrative that Bitcoin is “digital gold” As promoted by Wall Street giants like BlackRock’s Larry Fink, Bitcoin will be a big winner, along with other hard assets.

At the same time, Bitcoin will continue to benefit from its technological adoption.

Globally, more and more people understand the usefulness of decentralized, censorship-resistant, borderless and permissionless payment technology.

Meanwhile, crypto companies continue to build their centralized and decentralized platforms, improving Usefulness of Bitcoin and accessibility to the masses.

Bitcoin is likely to challenge $100,000 sometime in 2024 or 2025.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You can lose all your capital.

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