Bitcoin Plunges to $63K as Inflationary Hopes Dim

On April 25, Bitcoin's price dipped to $63,000 following the release of a U.S. inflation report that showed hotter inflation and slower growth than expected. The report dampened hopes for interest rate cuts, leading to a sell-off in risk assets across markets. Bitcoin briefly fell below $63,000, while Ether and altcoins also experienced significant declines. The CoinDesk 20 Index dropped by 6%, indicating a broad-market selloff. Analysts note that the disappointing inflation data has raised concerns about sticky inflation and the likelihood of a sustained period of high prices, impacting investor sentiment and risk appetite.

Diminishing Inflationary Hopes Cause Bitcoin Plunge to $63,000

April 25, 2024 (UTC)

Concerns over persistent inflation have adversely impacted risk assets, including cryptocurrencies, following a disappointing U.S. inflation report.

Influences of Economic Data

Preliminary figures from the U.S. government revealed a first-quarter gross domestic product (GDP) growth rate of only 1.6%, significantly below the 2.5% estimate and the 3.4% recorded in Q4 2023. Additionally, the GDP price index exceeded expectations, rising to 3.1% from the previous quarter's 1.6%.

The underwhelming inflation data has dampened hopes for interest rate cuts in the near future, triggering a sell-off in risk assets across the board. Major U.S. stock indices, such as the S&P 500 and Nasdaq, commenced trading over 2% lower, while the 10-year U.S. Treasury bond yield surged by 8 basis points to 4.73%, marking its highest level since November.

Market Impact on Bitcoin

Bitcoin (BTC) briefly dipped below $63,000 on Thursday, suffering a loss of over 4% to reach a low of $62,800. It has since recovered to around $63,700. Ether (ETH) also experienced a 4% decline during the same period, trading near $3,100.

Altcoin heavyweights, particularly native tokens from layer-1 networks like Solana (SOL), Avalanche (AVAX), and Aptos (APT), suffered even greater losses, plunging by 8%-9% before partially recovering. The broad-market benchmark CoinDesk 20 Index (CD20) declined by approximately 6%.

Conclusion

Persistent inflationary pressures, coupled with disappointing economic data, have led to a decline in risk appetite and a flight to safer assets. Bitcoin and other cryptocurrencies have not been immune to this trend, with their prices dropping in response to the market's risk-averse sentiment.

Disclaimer

The information provided in this article should not be construed as financial advice or an endorsement of any particular cryptocurrency or investment strategy. The cryptocurrency market is highly volatile and subject to significant fluctuations, and investors should conduct thorough research before making any investment decisions.