- US inflation data was hotter than expected, triggering a temporary market slump.
- Bitwise CIO claimed that US CPI data has less impact on BTC price action.
A temporary bloodbath in the markets ensued after the release of hotter-than-expected US CPI (Consumer Price Index) data on 10th April. The YoY (Year-over-Year) CPI was 3.5%, while the month-over-month inflation growth was 0.4%.
This meant that inflation was up and not down, which made analysts believe that the expected Fed rate cuts from June could be in limbo. Based on negative data, Bitcoin [BTC] dropped to $67.5K before fronting a quick recovery.
Bitwise CIO Matt Hougan, however, dismissed the impact of US CPI data on BTC price action, noting that,
“I don’t believe this move fading the higher-than-expected CPI. Whether the Fed cut rates 25bps in June or not isn’t the long-term driver of bitcoin prices right now. It’s a marginal factor.”
The Bitwise exec added,
“ETF flows + rising deficits matter more, and they are lining up very well for bitcoin.”
Bitcoin reclaims $70K
The executive referred to the rising US deficits that have worried some key figures, such as Galaxy’s Digital Mike Novogratz.
Deficits happen when government spending exceeds national revenue, increasing national debt. These are ripe conditions for currency devaluation, such as the US dollar. Bitcoin and gold can benefit in such scenarios.
However, the US president reiterated possible Fed rate cuts later in the year. Some market watchers believe this was the breather and what ended the temporary market bloodbath on 10th April.
At the time of writing, BTC traded at $70.7K and was above a key trendline resistance as the halving event inched closer.
However, the Open Interest (OI) rates fluctuated per Coinglass data. OI tracks opened contracts in the futures market and, by extension, the amount of money invested in BTC (liquidity).
This shows short-term market indecision as a halving event approaches and calls for caution.
