Bitcoin and Ethereum sank lower, each dropping more than 2% immediately after the U.S. Bureau of Labor Statistics announced that the Consumer Price Index increased 0.4% in March.
That means inflation last month was virtually unchanged from February and is still at 3.5%, according to the new BLS data.
At the time of writing, the Bitcoin price has slipped to below $68,000 and the Ethereum price is threatening to go lower than $3,400. Both assets—easily the two largest cryptocurrencies—account for roughly 65% of the $2.7 trillion global market capitalization for digital assets.
High inflation rates are bad news for crypto markets—and stocks, for that matter—because as long as inflation remains high, it is unlikely that the U.S. Federal Reserve will lower federal interest rates. The longer interest rates remain high, the more it strengthens the case for traditional safe havens like treasury bonds over crypto assets.
Bitcoin and Ethereum Dip Hours Ahead of New U.S. Inflation Data
Bitcoin and Ethereum have both dipped as investors watch with trepidation for the next round of U.S. inflation data to be released at 8:30 a.m. Eastern Time. It's worth noting, though, that both BTC and ETH have seen gains compared to last week's not so great start to the month. In the past seven days, the Bitcoin price has gained 4.3% and the Ethereum price has gained 6.3%. At the time of writing, Bitcoin is trading just below $69,000 after losing 2.3% in the past day. And the Ethereum price—wh...
The small bit of good news is that this morning's report isn't entirely unexpected, which should reduce volatility.
Ahead of this morning's announcement, analysts forecast that March data would show inflation had risen 3.4% compared to the same time last year. And the core CPI inflation rate, which leaves out volatile food and energy prices, was expected to drop from 3.8% to 3.7% over the same period.
Federal Reserve Chairman Jerome Powell recently said at a Stanford University event that he's confident the Fed won't raise rates in the near term. But he added that there's also no rush to reduce rates, either.
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 inflati...
“It’s too soon to say whether recent inflation readings are more than just a bump,” he said.
The U.S. Bureau of Labor Statistics released an update to its employment data last week, showing that payrolls had risen in March and the unemployment rate was relatively unchanged at 3.8%. The news was not well received in crypto markets, which slumped last week.
