The recent rebound in Bitcoin price on Monday can be attributed to investors eagerly anticipating the upcoming United States inflation data for April. This data is expected to play a crucial role in influencing the decision of the Federal Reserve on whether or not to reduce borrowing costs in 2024. The dollar saw a slight decline on the day, providing some relief to the crypto markets. Bitcoin managed to climb by 2.5% in the past 24 hours, reaching $62,639.1 by 08:16 ET (12:16 GMT). This increase came at a critical time when the cryptocurrency was on the verge of breaking below the $60,000 support level. Despite a 2% decrease in the past seven days, Bitcoin saw a positive turn amid fears of more U.S. regulatory actions in the crypto market.
The U.S. dollar, which has been a key negative catalyst for Bitcoin and other crypto prices in recent weeks, experienced a slight drop on Monday ahead of the consumer price index (CPI) report for April. With producer price index data set to be released on Tuesday, all eyes are on the closely watched consumer price index reading due on Wednesday. Any signs of persistent inflation are likely to reduce expectations of early interest rate cuts by the Federal Reserve, which could prove detrimental to crypto markets. The success of cryptocurrencies often relies on a low-rate, high-liquidity environment, making the prospect of higher U.S. rates less favorable for the crypto market.
In the face of intense market speculation, Bitcoin may witness a panic sell-off if it fails to maintain the $60,000 level in the near future. Traders are closely monitoring a potential rise above $65,000 to shift market sentiment towards a bullish outlook. Since March, Bitcoin has been oscillating between $60,000 and $70,000, with the much-anticipated halving event in April failing to provide the anticipated boost, ultimately leading to a ‘sell-the-news’ scenario due to a lack of fresh market catalysts. Reports have indicated a decline in inflows from ETFs, adding to the prevailing bearish mood.
Impact of US Rates
The outlook for cryptocurrencies has been clouded by the possibility of higher U.S. interest rates, which could disrupt the market equilibrium. With the potential for a less favorable interest rate environment, traders and investors in the crypto market are closely monitoring any developments that could influence the future trajectory of Bitcoin and other cryptocurrencies. The feedback from Fed officials and the upcoming inflation data will likely determine the direction of the market in the coming weeks.
Amidst the Bitcoin price rebound, the broader cryptocurrency market saw mixed performance on Monday as traders anxiously awaited the latest insights into inflation trends. Ethereum, the world’s second-largest cryptocurrency, managed to gain 1% and reach $2,959.61, while XRP experienced a modest 0.4% increase. On the other hand, Solana witnessed a decline of 0.16%, while the meme coin Dogecoin marginally decreased by 0.1%. This mixed performance in the broader cryptocurrency market highlights the volatility and uncertainty that currently surrounds the crypto space.