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Key Reasons Behind Bitcoin (BTC) Price Spike

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Thu, 11/07/2024 - 12:39
Key Reasons Behind Bitcoin (BTC) Price Spike
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The price of Bitcoin, the leading cryptocurrency, soared to an intraday high of $59,516 due to cooler-than-expected inflation in the U.S. 

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The Bureau of Labor Statistics consumer price index (CPI) surprised the market after economists had predicted a 0.1% increase in headline CPI. Instead, the U.S. recorded a negative CPI print in June (the first one since 2020).

Overall, the index experienced a 3% increase on the year-over-year basis, which is lower than that predicted by analysts. 

The better-than-expected inflation readings can be attributed to a decline in gas prices and energy.

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Fed swaps are now, as expected, pricing in more easing this year after the June CPI numbers. In fact, traders now see a 25% chance of as many as three rate cuts in 2025.  

Earlier this week, Federal Reserve Chair Jerome Powell said that the Fed had made "significant progress" in tackling inflation in his prepared testimony before the U.S. Congress. However, Powell has also warned that keeping the restrictive monetary policy in place could damage the economy. 

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Last week, the leading cryptocurrency experienced a massive plunge to a five-month low of $53,550 due to the double-whammy of Mt. Gox repayments and massive sales initiated by the German state of Saxony. However, the favorable macro picture might provide battered Bitcoin bulls with much-needed respite.  

As reported by U.Today, Fundstrat's Tom Lee, who believes that the Bitcoin price could reach $150,000 this year, predicted that U.S. inflation would end up declining dramatically in the second half of the year.

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