Bitcoin, Stock Prices Drop as US Inflation Data Comes in Hot

Bitcoin has dropped following news that inflation in February was hotter than expected. 

The price of the biggest digital asset by market cap is now down nearly 3% in 24 hours, according to CoinGecko. Its price stands at $70,920 per coin. Overnight, Bitcoin touched a new all-time high of slightly above $73,700.

Data from the Labor Department's Bureau of Labor Statistics showed on Thursday that the producer price index jumped 0.6% last month. It was expected to rise just 0.3%—meaning that inflation isn't going away just yet.

The index measures the change in the prices after they leave a manufacturer and is a key indicator of inflation.

Stocks didn't move much at first, but have since dropped lower. The S&P 500 is down by 0.2% while the tech-heavy Nasdaq has fallen nearly 0.2%. The Dow Jones Industrial Average is also down by about 0.3%. U.S. equities—particularly tech stocks—are "risk assets," and tend to drop on hot inflation data with cryptocurrencies.

Investors are hoping that the Federal Reserve will cut interest rates by May, but the central bank may keep them where they are if inflation doesn't come down in the world's largest economy.

Experts have told Decrypt that the price of Bitcoin would continue to surge if interest rates do come down.

Bitcoin and the wider crypto market has surged following the approval in January of spot Bitcoin exchange-traded funds, or ETFs, which let investors gain exposure to the cryptocurrency without actually having to hold and store it.

The funds have recorded huge inflows and trading day volumes. Net inflows this week for the 10 ETFs passed the $1 billion mark, and the funds now have over $60 billion in assets under management.

Edited by Andrew Hayward