Bitcoin faced a retreat on Wednesday as traders adopted a cautious stance in anticipation of pivotal U.S. inflation data, steering clear of high-risk assets amid market uncertainty.
Amidst the prevailing sentiment favoring safe-haven assets like the dollar and gold, Bitcoin experienced a decline of 2.4% over the past 24 hours, settling at $69,373.7 by 01:51 ET (05:51 GMT). This downturn mirrored the weakness observed across various risk-driven assets.
The surge in commodity prices, particularly oil and metals, diverted attention away from cryptocurrencies as market participants anticipated an upswing in global economic conditions, subsequently boosting demand for commodities.
As traders awaited the release of U.S. consumer price index data later in the day, expectations lingered for persistently elevated inflation levels through March. Such a trend could diminish the likelihood of the Federal Reserve implementing interest rate cuts, posing challenges for speculative assets like Bitcoin that typically thrive in low-rate environments with ample liquidity.
Bitcoin’s decline exerted downward pressure on other cryptocurrencies, with Ethereum witnessing a 4.2% drop, while XRP and Solana experienced losses of 1.1% and 3.6%, respectively.
In addition to inflation data, market participants awaited insights from the Federal Reserve’s March meeting minutes. While the Fed had signaled potential rate cuts, doubts emerged among officials post-meeting, particularly in light of stubborn inflationary pressures.
Despite prevailing uncertainties, attention remained fixed on the impending Bitcoin halving event, scheduled around April 20 with the generation of block no. 840,000 on the Bitcoin blockchain. This event, reducing the rate of new Bitcoin issuance by half, is anticipated to reinforce the narrative of Bitcoin’s scarcity driving upward price momentum.
Bitcoin had previously surged to a record high exceeding $73,000 in early 2023, fueled by increased capital inflows following U.S. approval of spot exchange-traded funds. However, recent data suggesting a slowdown in these capital inflows raised questions regarding Bitcoin’s sustained momentum in the market.
