Despite the jolts delivered by hotter-than-expected U.S. inflation figures, Bitcoin exhibited unexpected resilience on Thursday, maintaining proximity to its all-time highs. The cryptocurrency’s steadfast performance occurred even as the dollar surged and market expectations for interest rate adjustments wavered.
A contributing factor to Bitcoin‘s robust stance is the imminent halving event, anticipated to occur around April 20 with the generation of block no. 840,000 on the Bitcoin blockchain. This event, reducing the pace of new Bitcoin generation, underscores the narrative of token scarcity potentially driving its value higher. However, the lead-up to the halving is also anticipated to introduce heightened volatility to Bitcoin markets.
Over the past 24 hours, Bitcoin demonstrated a 2.1% ascent, reaching $70,576.4 by 00:53 ET (04:53 GMT). Investors now keenly anticipate the halving event’s impact, particularly as interest in spot-traded Bitcoin exchange traded funds (ETFs) has notably waned, with recent data revealing a substantial decline in daily volumes. Bitcoin ETFs have been pivotal in propelling the token’s rally in 2024, with Bitcoin still maintaining a commendable 50% increase for the year thus far.
Amidst these developments, broader cryptocurrency prices experienced a rebound on Thursday, recuperating from earlier setbacks despite the specter of prolonged U.S. interest rates. Ethereum, the second-largest cryptocurrency globally, saw a 1.3% increase, reaching $3,565.0, while XRP and Solana registered gains of 1.7% and 1.5%, respectively.
However, the recent surge in U.S. consumer price index data has led traders to reconsider their expectations regarding Federal Reserve policy shifts, with a notable retreat from projections of interest rate cuts by June. The resultant surge in the dollar to five-month highs underscores the growing concern among Fed officials regarding persistent inflation, fueling discussions of sustained interest rate hikes.
Such a trajectory poses challenges for cryptocurrency markets, traditionally thriving in low-rate, high-liquidity environments owing to their speculative nature.
In parallel developments, the regulatory landscape witnessed the U.S. Securities and Exchange Commission signaling enforcement action against Uniswap Labs, a major decentralized exchange operator. Uniswap acknowledged the SEC‘s notification and attributed it to the regulator’s stance on the classification of cryptocurrencies as securities. The ensuing 16% decline in the exchange’s native token underscores the mounting regulatory scrutiny confronting the cryptocurrency sector, exemplified by ongoing lawsuits involving industry stalwarts such as Coinbase and XRP, which are poised to delineate the applicability of traditional U.S. securities laws to cryptocurrencies.
