Crypto Analyzer

Bitcoin having best day since March following cooler April inflation reading

## Bitcoin Sees Strong Rally Amid Cooler April Inflation Reading

Bitcoin experienced its best day since March as it surged alongside stocks on Wednesday following a report showing a lower-than-expected inflation rate for April. The cryptocurrency’s price rose by over 5% to $64,910.57, marking its best performance since March 25. This rally pushed Bitcoin above its 50-day moving average for the first time since April 13, although it later dipped below this level.

Analysts pointed to the April consumer price index data, which indicated a slight easing of inflation compared to the previous month. This news increased the likelihood of a rate cut, which is seen as a significant factor influencing Bitcoin’s price movements. Owen Lau, an analyst at Oppenheimer, highlighted the potential impact of a rate cut on Bitcoin’s trajectory, suggesting that the cryptocurrency could trade in line with macroeconomic indicators until there is more clarity on interest rate adjustments.

Leena ElDeeb, an analyst at 21Shares, noted that the cooling U.S. core CPI figure prompted investors to reevaluate their risk-on asset allocations, potentially fueling more inflows into Bitcoin. She highlighted the unique positioning of Bitcoin as both a risk-on and a risk-off asset, with many investors holding a long-term view of the digital currency. ElDeeb emphasized that while Federal Reserve policies may contribute to short-term volatility in Bitcoin, they are unlikely to alter its long-term growth trajectory significantly.

Bitcoin’s recent price movements have been heavily influenced by macroeconomic factors, following significant events like the launch of Bitcoin exchange-traded funds and the halving event. Despite a recent two-day resurgence in meme stocks, Bitcoin remained relatively stable. With the substantial gain on Wednesday, Bitcoin is up 7% for the week, marking its best performance since March 29 and potentially signaling the end of a six-week downward trend.

Since March, Bitcoin has largely traded within the $60,000 to $70,000 range, fluctuating slightly above and below this level. Investors and analysts anticipate that Bitcoin will continue to consolidate within this range for the foreseeable future, barring any major catalysts.

In summary, Bitcoin’s recent rally, driven by a favorable inflation report and a potential rate cut, highlights the cryptocurrency’s resilience and its status as a prominent investment asset. With market sentiment favoring risk-on assets like Bitcoin, investors are closely monitoring macroeconomic developments for clues on the digital currency’s future performance.