The U.S. Bureau of Labor Statistics (BLS) just published their data for March. The numbers unveiled are already leading many to conclude that any potential rate cuts from the Federal Reserve in June are now entirely off the table. Within a brief span of 20 minutes, Bitcoin experienced a drop from approximately $69,000 to around $67,500. Given its classification as a “speculative asset” by mainstream investors, the abrupt decline may very well persist. At the time of writing, the S&P 500 has dropped almost one percent which could spell bad news for Bitcoin.
NBX maintains its position as the most AML-compliant cryptocurrency exchange within the Nordic region.
The BLS data disclosed that the consumer price index (CPI) in the U.S. for the month of March rose 0.4% monthly and 3.5% annually. Surveyed economists had projected a monthly increase of 0.3% and an annual increase of 3.4%. Core CPI, which excludes food and energy, came in at 0.4% on a monthly basis and 3.8% on an annual basis - also higher than expected. With the actual figures surpassing expectations and coming in hotter than expected, markets are predicted to experience a downturn, as the Federal Reserve is now even more likely to retain the current interest rate level.
Prior to the release of the BLS data, the market had priced in a 50% probability of a rate cut in June. However, this optimism quickly faded, and the market is now pricing in a sub 30% chance of a rate cut in June.
For Bitcoin and cryptocurrencies in general, rate cuts would be more than welcoming. As we reiterated last week, lower interest rates and “risk-on” is an environment that Bitcoin thrives in. To make matters worse, at least for this week, the spot Bitcoin ETFs have experienced a total net outflow when combining the cumulative flow of all the ETFs thus far this week. On Monday, inflows into the likes of IBIT and FBTC could not match the massive $303.3 million outflow from GBTC and the result was a negative flow of $223.8 million when combining the ETF flows, according to Farside. Yesterday, the inflows to all of the other ETFs almost matched up with the outflow from GBTC, but still could not manage to get the cumulative ETF flow in positive territory as the result was $18.6 million in net cumulative outflow.
Despite macro conditions, we are only a little more than a week away from the Bitcoin halving. With the supply of new Bitcoins to be cut in half, the ETF suppliers, all else being equal, will play an ever greater role should the demand of their exchange traded funds (excluding GBTC) continue to increase.
This text is intended to inform and is not an investment recommendation.
Best regards,
Adam Jakobsen.
NBX.
