Bitcoin Price Surges Following Lower-Than-Expected CPI Data, Positive ETF Flows

Bitcoin Price Rises After Lower-Expected CPI Data and Positive ETF Flows

Bitcoin (BTC) has experienced a rally in the last 24 hours, reaching $66,190 and gaining over 7.5%. This increase was in response to the release of US Consumer Price Index (CPI) data, which has implications for possible interest rate cuts in 2024.

According to the U.S. Bureau of Labor Statistics (BLS), April’s Consumer Price Index came in at 0.3%, below the expected rate of 0.4%. March CPI pressure was 0.4%; This stood at 3.4% for the index at the end of April, showing a lower rate of increase over the last twelve months. Rising housing and gasoline costs were the main factors responsible for “more than seventy percent of the monthly increase in the index for all items.”

Market participants immediately began discussing the possibility of a Federal Reserve rate cut. Currently, traders are counting on the possibility that the rate cut in June will be only 3.1%. According to CME’s FedWatch tool, the market predicts that the first possible interest rate cut will occur in September with a 53% probability.

Positive inflows into spot Bitcoin ETFs also played a role in boosting investor sentiment. According to Farside Investors, on May 15, US spot Bitcoin ETFs recorded net inflows of over $153 million; Bitwise’s BITB is leading the way. Grayscale Bitcoin Trust (GBTC), which typically experiences outflows, saw an inflow of a staggering $27 million. This follows weeks of net outflows from spot Bitcoin ETFs, coinciding with the Bitcoin price falling from its all-time high of $73,750 reached on March 14. Wisconsin Board of Investment says it owns approximately $164 million worth of spot Bitcoin ETFs.