Ramazan Eles 
Bitcoin prices plunged after hotter-than-expected US inflation data reignited concerns about delayed Fed rate cuts. The Consumer Price Index (CPI) for March landed at 3.5%, exceeding analyst estimates of 3.4% and the prior month’s reading of 3.2%.
US Inflation Data Casts Shadow on Fed Policy
The March inflation data, released by the U.S. Bureau of Labor Statistics, carries significant weight for financial markets as it impacts the Federal Reserve’s monetary policy decisions. Earlier expectations anticipated the Fed’s first rate cut in September, but today’s data suggests a longer wait. The stubbornly high inflation rate indicates the Fed’s target of 2% inflation remains elusive, potentially delaying rate cuts and keeping interest rates elevated for an extended period.
US CPI Details: Hotter Inflation Across the Board
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in March on a seasonally adjusted basis, matching February’s increase. Unadjusted year-over-year inflation sits at 3.5%. Core CPI inflation, excluding volatile food and energy prices, remained steady at 3.8% compared to last month.
Analysts Anticipated Lower Inflation
Market analysts had projected a core CPI print of 0.3% month-on-month and a headline inflation increase to 3.4% year-over-year. The core inflation number, initially expected to decline to 3.7% year-over-year from February’s 3.8%, surprised with no change.
Since the year’s beginning, investors have been closely monitoring inflation data to gauge the Fed’s rate cut timeline. Initial bets on three rate cuts in 2024 have faded as economic indicators paint a different picture. Hopes for a June or July rate cut have vanished, with September now holding the most weight – although CME FedWatch Tool suggests only a 45% chance of a September cut.
Bitcoin Feels the Heat: Price Falls Below Key Support
Financial markets reeled from the unexpected inflation data, and Bitcoin prices were not spared. At the time of writing, BTC price sits at $67,721.59, a decrease of nearly 4.3% compared to yesterday.
The hotter-than-expected inflation data raises concerns about potential further declines in Bitcoin prices. However, Bitcoin could still be viewed as an inflation hedge by some traders seeking an alternative to potentially volatile equity markets.
Analyst Predictions and Key Levels to Watch
As previously reported by CoinGape, analyst Markus Thielen predicted a drop in Bitcoin price to $62,000 due to halving-related volatility, with Ethereum potentially falling below $3,100 due to low trading volume. Traders should closely monitor key price levels for Bitcoin at $68,330 and Ethereum at $3,460 for further market direction.