Bitcoin Price Swings Around $64,000 After US Inflation Report – What You Should Know
The price of Bitcoin (BTC) fluctuated around the $64,000 mark following the release of the latest US inflation data report. The report revealed that the Core PCE index rose by 0.3% month-on-month in March, meeting market expectations. This translates to an annualized inflation rate of approximately 3.6%, well above the Federal Reserve’s target of 2%. Economists have pointed out that high housing and utility inflation could keep price pressures elevated for an extended period. As a result, the Fed is likely to maintain higher interest rates for a longer duration. The recent strong data reports, such as manufacturing PMI and employment figures, have led to the US dollar strengthening and bond yields reaching multi-month highs. This macroeconomic environment, with expectations of persistent inflation and a less eager Fed to cut rates, poses a short-term challenge for Bitcoin. Historically, Bitcoin has performed better during periods of falling US yields and a weakening US dollar.
However, there are indications that the US economy is slowing down. The flash PMI report for April showed weakness in economic activity, and the Q1 GDP numbers were disappointing. Until this weakness translates into lower inflation, the Fed is likely to exercise caution in reducing rates, which will continue to pose a challenge for BTC.
Bitcoin Price Analysis – What Lies Ahead for BTC?
Currently, the Bitcoin price is trading near the lower end of its multi-week range between $60,000 and $74,000. Despite recent macroeconomic headwinds and a slowdown in ETF flows, BTC has maintained this range. The strength in stablecoin growth suggests that there are still significant inflows into the crypto market. According to DeFi Llama, the stablecoin market cap is at its highest level since June 2022, reaching $158 billion. This represents a $34 billion increase since the end of October, and further growth could support the Bitcoin price. However, a decline in stablecoin growth could signal a potential drop in the price of Bitcoin. Currently, Bitcoin is at risk of falling below its range lows around $60,000, which could lead to a further decline toward support at $53,000.
Bitcoin’s Long-term Bull Market Outlook
Despite short-term uncertainties, most people remain confident in Bitcoin’s long-term prospects. The recent quadrennial halving, the fourth in Bitcoin’s history, typically results in the price reaching new all-time highs within a few quarters. This time, Bitcoin reached all-time highs before the halving due to increased demand for ETFs. While this raises the risk of a post-halving correction, it does not undermine the long-term outlook. The long-term trend indicates increased adoption and investment in Bitcoin, driven by traditional finance (TradFi) and the availability of ETFs. Additionally, macroeconomic factors, such as unsustainable borrowing by major economies and global currency debasement, will support Bitcoin’s long-term growth. As the narrative of Bitcoin being “digital gold” gains traction, it will attract more investors alongside other hard assets. Furthermore, the ongoing technological advancements and the growing understanding of the utility of decentralized payment technology will continue to benefit Bitcoin. Crypto firms are also expanding their platforms, making Bitcoin more accessible to the masses. It is projected that Bitcoin will likely reach $100,000 sometime between 2024 and 2025.
Disclaimer: Investing in cryptocurrencies carries a high level of risk. This article is for informational purposes only and should not be considered investment advice. It is possible to lose all of your invested capital.