Bitcoin was changing hands below $40,000 earlier in the day, but around 13:00 UTC, the price suddenly jumped above $41,000 in just an hour, with high trading volume.Read MoreFeedzy
Bitcoin (BTC), the largest cryptocurrency by market capitalization, surged past the key psychological price level of $40,000 on Wednesday as investors digested U.S. Labor Department data showing inflation climbing last month to a fresh four-decade-high.
Bitcoin was changing hands below $40,000 earlier in the day, but 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 tries to find support after the its price dropped from $43,000-level starting this week.
The move followed suit of the stocks markets opening on a positive note, with the Nasdaq up 1.3% and the S&P 500 Index gaining 0.6% on the day. Sentiment in the equity market is key as bitcoin’s correlation with stocks remains at a high level.
“Bitcoin is rallying as the bond market rethinks its aggressive Fed tightening bets,” said Edward Moya, senior market analyst at the foreign-exchange broker Oanda. “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.”
Most popular cryptocurrencies jumped in tandem with Bitcoin: Ether (ETH) gained 1.6% and AVAX, the Avalanche blockchain’s token, jumped 4% on the day. Solana (SOL) is down 1.4% at press time.
On Tuesday, the U.S. Labor Department published Consumer Price Index (CPI) for March, which jumped to a four-decade high of 8.5%, slightly beating analysts’ expectations because of rapidly rising energy and food prices. While some economists argue that inflation probably peaked last month, the higher-than-expected data may strengthen the Federal Reserve’s resolve to hike funding rates in the next meeting and shrink its balance sheet by $95 billion a month.
“Bitcoin is rallying as the bond market rethinks its aggressive Fed tightening bets,” Oanda’s senior market analyst Edward Moya said. “Bitcoin will continue to follow the lead set in equities and right now optimism is growing that the US 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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