Bitcoin Soars High, Stumbles on Inflation Indicators Exceeding Expectations

Once Below $70,000

Bitcoin, the cryptocurrency that had been on a soaring run, fell on the 14th (local time) due to inflation concerns after a series of inflation indices exceeded market expectations.

According to the US cryptocurrency exchange Coinbase, at around 5:25 PM Eastern Time, the price of one Bitcoin dropped 3.1% compared to 24 hours earlier, recording $70,786 (approximately 93.58 million KRW). Bitcoin briefly broke below the $70,000 mark, falling to around $69,400.

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At the same time, Ethereum, ranked second in market capitalization, also fell 3.61%, trading at $3,842 (approximately 5.08 million KRW) per coin.

Recently, Bitcoin reached an all-time high due to inflows into spot exchange-traded funds (ETFs), the halving event, and expectations of interest rate cuts by the US Federal Reserve (Fed). On the 5th, it surpassed the previous high recorded in November 2021 after 28 months, and on the 13th, it surged to $73,780 (approximately 97.54 million KRW), nearly breaking through the $74,000 level.

However, Bitcoin prices were affected as the Producer Price Index (PPI) exceeded market expectations and inflation concerns grew. According to the US Department of Labor, the PPI in February rose 1.6% year-on-year, significantly surpassing the market forecast of 1.1%. Not only the wholesale price index PPI but also the Consumer Price Index (CPI) released earlier for February rose 3.2% year-on-year, exceeding the market forecast of 3.1%. With inflation indicators consecutively surpassing expectations ahead of the Federal Open Market Committee (FOMC) meeting, there is growing weight to the view that the Fed will maintain a cautious stance on early interest rate cuts.

Additionally, the yield on the US 10-year Treasury note, which had fallen below 4% earlier this month, rose to about 4.30%, and the dollar increased about 1% over the week, ending the downtrend that began in mid-February. CoinDesk explained, "High interest rates and a rising dollar have a negative impact on risk assets like Bitcoin."

CoinDesk also stated, "Expectations for interest rate cuts this year continue to decline," adding, "According to the Chicago Mercantile Exchange (CME) FedWatch tool, the probability of a rate cut in June has dropped to about 50%."