Bitcoin Flirts With $70K Again Amid Inflation Respite Before Fed Meeting
Bitcoin's price (BTC) rose to nearly $70,000 Wednesday as investors cheered better-than-expected inflation data for May that raised hopes of a rate cut by the U.S. Federal Reserve.
U.S. Consumer Price Index (CPI) data released Wednesday morning showed that prices remained unchanged month-over-month and rose at an annual pace of 3.3%, slower than 12 months prior.
The Fed is set to announce a rate decision Wednesday. Although it's not expected to cut rates, the latest inflation report gives it more leeway to move on rates when it does decide to lower them.
Bitcoin prices took a cue from Wednesday's inflation report, reversing their downtrend from Friday to come within striking distance of the $70,000 level. At 12:30 p.m. ET, bitcoin was trading at $69,359.30.
With inflation trending lower, the data-dependent Federal Reserve has more reason to consider lowering interest rates. The Fed's rate hike campaign to combat inflation has pushed rates to 23-year highs.
Why does that matter to bitcoin investors?
Although bitcoin is often touted as a safe haven asset of sorts, the reality is it still very much acts as a risk asset, as indicated by the price rise after cooler inflation numbers were released.
Bond yields also have surged amid higher rates, so that means bonds—a relatively less risky asset—also offer a good return, making them more attractive to investors. Lower interest rates that follow a Fed rate cut will likely drag down bond yields, potentially tempting investors to bet on risk assets like crypto in search of higher returns.
In the run-up to Wednesday's inflation data and subsequent Fed meeting, bitcoin investors were getting nervous. Not only did the cryptocurrency's price skid, spot bitcoin exchange-traded
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