Bitcoin Jumps Above $41K, Rising With Nasdaq, S&P
The largest cryptocurrency whipsaws around the $40,000 level as markets digest elevated U.S. inflation readings.
Bitcoin (BTC), the largest cryptocurrency by market capitalization, surged past the key psychological price level of $40,000 on Wednesday as investors digested news that inflation hit a four-decade-high in March.
- Bitcoin was changing hands at below $40,000 earlier in the day, but at around 13:00 UTC (coordinated universal time), the price suddenly jumped above $41,000 in just an hour with high trading volume.
- Bitcoin's price is trying to find a support level after it dropped from $43,000 earlier this week.
- The move higher followed the stocks markets opening on a positive note, with the Nasdaq up 1.3% and the S&P 500 gaining 0.6%. Sentiment in the equity market is key as bitcoin's correlation with stocks remains at a high level.
- The consumer price index (CPI) for March rose 8.5% on rapidly increasing energy and food prices. While some economists argue that inflation probably peaked last month, the higher-than-expected number may strengthen the Federal Reserve's resolve to raise interest rates at its next meeting and shrink its balance sheet by as much as $95 billion a month.
- "Bitcoin is rallying as the bond market rethinks its aggressive Fed tightening bets," Edward Moya, an analyst at the foreign-exchange broker Oanda, said. "Bitcoin will continue to follow the lead set in equities, and right now optimism is growing that the U.S. consumer is still in good shape. Bitcoin seems like it could trade in a range from $38,000 to $48,000 as stocks might have limited upside this earnings season given the elevated geopolitical and inflation risks for corporate America."
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