Bitcoin price edges back toward $31,000 as inflation data boosts markets

Quick Take

  • Bitcoin edges towards $31,000 as fresh inflation data boosts markets, with some analysts pointing to signs of a rate cut in 2024.

Bitcoin edged toward $31,000 as U.S. inflation data for June came in below expectations, with prices rising 3% over the past year. 

The world's largest cryptocurrency by market capitalization rose 0.5% at 9:50 a.m. in New York to $30,633. It's up almost 18% over the past month. 

The inflation deceleration might not be enough keep the Federal Reserve from another rate rise this month, but some analysts think that rate cuts in early 2024 are already being priced in.

“The euro dollar futures curve shows the market is pricing in a rate cut in the March to June 2024 time frame,” Ravi Doshi, head of trading at Genesis, told The Block. “Historically when there is a U-turn, rate cuts happen faster than rate hikes."

Regulatory uncertainty a major overhang

But Doshi argued that rates aren't the major factor determining bitcoin’s price trajectory at the moment. Instead he pointed to regulatory uncertainty. He highlighted August 13 as a date to watch, as it's one of the deadlines for a decision on the ARK 21Shares spot Bitcoin ETF from the U.S. Securities and Exchange Commission. 

On Wednesday, buoyant signals emerged in European markets ahead of the CPI release. In London, the FTSE 100 maintained a solid position above its March low at 7,204, while the pan-European Stoxx 600 was up 0.9% by early afternoon.

The Bank of England is signaling a more aggressive stance toward future interest rate hikes compared to the Fed, primarily driven by the need to control the UK's persistent inflation issues. This forecast has bolstered the pound, which briefly achieved ia 15-month peak against the dollar on Wednesday.

The prospect of higher interest rates also boosted UK bank stocks, supported by a favorable financial stability report from the Bank of England.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.