Key Points
- The U.S. annual consumer price index for March was 3.5%, coinciding with a drop in Bitcoin’s value.
- Bitcoin (BTC) experienced a sharp decline, with trading volumes increasing by 7% to $35.6 billion over the past 24 hours.
The U.S. annual consumer price index (CPI) for March registered at 3.5%, which coincided with a sharp fall in the value of Bitcoin.
Bitcoin (BTC) experienced a significant drop, bottoming out around $67,500. This figure is according to data from the U.S. Department of Labor, which also reported a 0.4% acceleration in inflation, a substantial increase from February’s value.
Bitcoin’s Reaction to Inflation Data
Following the release of the inflation data, Bitcoin’s price dipped below $68,000. This decline followed an already noticeable drawdown, triggering a series of liquidations in future contracts. As per CoinGlass data, these liquidations amounted to $311 million, predominantly in long positions.
At the time of writing, BTC is trading around $67,700, showing a slight recovery from its sharp decline. The past 24 hours have seen trading volumes rise by 7% to $35.6 billion.
Bitcoin and Inflation
The CPI is a measure of inflation, and when it reaches high values, fiat currencies like the dollar lose purchasing power. Some view Bitcoin as a safe haven for capital. However, the relationship between CPI and Bitcoin’s price is not always direct and positive. The digital asset market is known for its volatility.
In late March, analysts at QCP Capital predicted that BTC could face a correction in the medium term due to rising inflation rates in the U.S. They pointed to a decrease in capital inflows into the spot Bitcoin ETF sector in their forecast. This transition to the red zone resulted in a significant drawdown in the asset price below $61,000.
