Bitcoin surges as US April CPI data is lower than forecast

Bitcoin prices rose after the US Bureau of Labor Statistics (BLS) reported on Wednesday that the consumer price index in April increased 0.3% over the previous month but was lower than Dow Jones' forecast of 0.4%. .

Compared to the same period last year, CPI - the preferred inflation measure of the US Federal Reserve (Fed), increased by 3.4% as expected and decreased slightly compared to 3.5% in March.

The monthly and annual figures for core CPI, which exclude volatile food and energy prices, were as expected.

Shortly after the BLS released new consumer price index data, Bitcoin price is now at $63,142, CoinGecko data shows. That's a 3% increase over the past 24-hour period and 1.4% higher than an hour ago.

And the price of Ethereum, the second-largest digital asset by market capitalization, is now $2,944.94 — up 1.8% over the past 24-hour period and 2% from an hour ago.

The CPI report measures price changes in a basket of common consumer goods and services and is used to estimate changes in the economy's inflation rate.

In yesterday's report, which included consumer price data for April, the BLS reported that housing prices and gas prices were the two biggest factors driving price increases.

'Combined, these two indexes contributed more than 70% of the monthly index increase for all commodities,' BLS wrote in its summary.

A Reuters survey this week showed that economists initially expected the Fed to lower interest rates early this year but many now think the cut will come in September.

US stocks - especially technology stocks - have rallied, with the NASDAQ-100 technology sector index (NDXT) up 72 trading points 0.72% higher than this time yesterday. Meanwhile, the S&P 500 rose 0.48% ahead of the US market open.

In March, Bitcoin hit a new all-time high of nearly $74,000. This surge comes after spot Bitcoin exchange-traded funds (ETFs) were approved in January, which led to an influx of capital into the market.

But data shows inflation is not going away and so the Fed's lack of rush to lower historically high interest rates has stalled the asset's performance. When interest rates are high, investors tend to 'de-risk' and avoid assets like Bitcoin.

As a result, the digital currency last traded below its 2021 record of $69,044.