Despite a rapid 2% drop after the CPI numbers came out, Bitcoin has made a sharp recovery, reclaiming the $70,000 price level and growing 1.8% in the past 24 hours.
Bitcoin fell to $68,000 after the release of US inflation data on Wednesday, as anticipation of key inflation data led traders to largely avoid highly speculative and risky assets.
Market sentiment appeared to be leaning more towards safe havens such as the dollar and gold, after the yellow metal hit a record high this week.
The rise in commodity prices, particularly oil and metals, has also shifted focus away from the digital currency, as markets bet that improving global economic conditions in the coming months will support demand for commodities.
This data, which exceeded estimates, will give the US Federal Reserve less impetus to start cutting interest rates, a scenario that bodes ill for speculative assets such as Bitcoin.
Beyond inflation data, the minutes from the Fed’s March meeting are also under the radar. While the Fed said it would cut interest rates by 75 basis points, many officials questioned that forecast after the meeting, especially in the face of persistent inflation.
But the losses of the world's leading cryptocurrency remained limited in anticipation of the halving event, which is scheduled to occur around April 20.
This event, which will occur with the generation of block number 840,000 on the Bitcoin blockchain, will see the rate of mining new Bitcoins cut in half.
This event is expected to reinforce the narrative that the relative scarcity of Bitcoin will drive up its price.
Bitcoin had surged to a record high of more than $73,000 earlier in 2023, and to $70,000 in recent weeks, mainly supported by increased capital inflows after the US approved spot exchange-traded funds.
