Bitcoin steady above $30K as Wall Street winds up as US March PPI data releases

Tonight, the United States announced that the PPI producer price index fell by 0.5% in March, which was lower than expected. This is bad news for a stronger dollar, but good news for the crypto market.

The Producer Price Index (PPI) reflects the average change in prices of goods and services for producers at various stages of the processing process.

As producers pay more for goods and services, they are more likely to pass on higher costs to consumers. Therefore, PPI can be said to be a leading indicator of consumer inflation.

U.S. March PPI index.Source: Forex Factory

The U.S. Bureau of Labor Statistics announced that the PPI producer price index fell by 0.5% in March from the previous month. Core PPI fell 0.1%, below expectations. It also suggests that the pace of price growth in the US is slowing. This appears to be good news for crypto markets and risk assets.

Also, initial jobless claims for the first week of April came in at 239,000, beating expectations for 233,000.

Both indicators above are said to be negative signs for the dollar. After the PPI was announced, the dollar fell strongly by 0.34% to below 101. Since the beginning of March, against the backdrop of the ongoing banking crisis, the strength of the US dollar has continued to decline.

Expect the Fed to raise interest rates

Fed watchers expect the central bank to raise the federal funds rate by 0.25% or 0.5%.

The CME’s FedWatch tool recorded a 0.5 percent rate hike forecast, while there was a 72 percent chance of at least a 0.25 percent hike at the next meeting.

“The Fed will make an important decision at its next meeting on May 2-3. Chances of a further 0.25% hike are now 72%. That’s according to the CME Fed Tracker.”

Congress has given the Fed the dual mandate of maximizing U.S. employment data and stabilizing the dollar.

Bitcoin prices and other cryptocurrency trading markets will spend the rest of April digesting the news, along with stocks, bonds and other liquid financial markets.

Bitcoin Price Soars as Wall Street Surges

Wall Street has been flat since Monday, when news of a May rate hike broke. Blue-chip tech stocks underperformed as shares of Apple, Alphabet and Tesla fell on the day and dragged the Nasdaq Composite lower.

Meanwhile, bitcoin prices are up more than 8 percent since Monday. The rally helped Bitcoin break the $30,000 resistance and hit a new 10-month high.

Source: TradingView

Not sure if this rally is due to the upcoming federal rate hike, or despite it. Higher interest rates put pressure on liquidity flows, which helps drive up the price of bitcoin and other investment assets.

The stock market tends to fall when interest rates rise because it affects investment returns. If the stock market succumbs to a more hawkish financial regime in May, cryptocurrency prices could fall accordingly.

It should also be noted that BTC was barely affected by the latest CPI and PPI data released in March, remaining firmly above $30,000.

  • Tyler Winklevoss and Cameron Winklevoss Put $100M Into Gemini
  • Gemini, Coinbase, and Binance US saw serious dips in market depth in March

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