Bitcoin faced a setback as it briefly dropped below the $63,000 mark, with the latest U.S. inflation data being the cause. The economic figures, including a lower-than-expected GDP growth and a surge in inflation rates, have raised concerns among cryptocurrency enthusiasts and investors. The first-quarter GDP report for 2024 showed a decline in growth to 1.6%, compared to the previous quarter’s 3.4% and below analyst expectations of 2.5%. Additionally, the GDP price index increased to 3.1% from 1.6%, indicating higher inflation. This combination of slowing growth and rising inflation has shaken financial markets, including cryptocurrencies like Bitcoin.
The impact of these unsettling economic data was immediately felt across various asset classes. Traditional stock markets, such as the S&P 500 and Nasdaq, saw significant declines, while the bond market experienced a rise in yields on 10-year U.S. Treasury notes. Cryptocurrencies, including Bitcoin and Ethereum, also faced a decline, with Bitcoin dropping over 4% before recovering slightly.
This market turbulence has shed light on liquidity within cryptocurrency exchanges. On the day of the report, sell orders reached around $75 million, forming a strong resistance level. However, buying interest was less aggressive, with bids concentrated around the day’s low. Despite the initial reactions, Bitcoin managed to fill one of the gaps left by recent futures trading on the CME Group, suggesting potential stabilization in the short term.
The response to the U.S. economic data has cast doubt on the Federal Reserve’s ability to cut interest rates, which could delay recovery for assets like Bitcoin. The trading sentiment captured by crypto trading firms indicates a cautious approach in the immediate term, with limited upside potential for Bitcoin and likely consolidation around current levels as the market absorbs the full impact of the economic indicators.