The price of Bitcoin, the largest cryptocurrency by market capitalization, recently plunged to as low as $67,482 on the Bitstamp exchange.
This came after the core consumer price index (CPI) came in hot for the third consecutive month. Consumer prices grew 3.5% on a year-over-year basis in March, which is above analysts' expectations.
The most recent disproved the thesis that January was simply a seasonal anomaly, according to Jason Furman, professor of practice at Harvard.
The price of Bitcoin fell in tandem with the U.S. stocks. Virtually all sectors of the S&P 500 experienced significant declines while Russell 2000, which focuses on small-cap stocks, saw one of its worst days of the year.
Apollo Global Management has noted that the Fed is not done fighting inflation, which means that higher interest rates will stay for longer.
Notably, futures traders are now pricing in only an 18% chance of a June rate cut. The Fed is now expected to cut rates fewer than two times this year. This, of course, will not bode well for risk assets of the likes of Bitcoin.
The bigger picture
Despite the seemingly bleak outlook, Bitwise Invest CIO Matt Hougan believes that there are other factors in play. Hogan sees Bitcoin ETF flows as well as the growing deficit as more important drivers of Bitcoin's long-term prices.
"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," he wrote on the X social media network (formerly Twitter).
Bitcoin is currently trading at the $68,660 level after paring some losses.
Vladislav Sopov
Dan Burgin