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Bitcoin price today: rises above $62k as dollar weakens ahead of CPI data

Published 05/15/2024, 01:56 AM
Updated 05/15/2024, 08:04 AM
© Reuters
- Bitcoin price rose slightly on Wednesday, boosted by modest positive movement as the dollar weakened, ahead of a key U.S. consumer inflation report.

The world’s largest cryptocurrency climbed 1% over the past 24 hours to $62,489.1 by 07:58 ET (11:58 GMT).

Bitcoin witnessed some relief as the dollar sank on Tuesday after Federal Reserve Chair Jerome Powell said that current monetary policy was restrictive enough, indicating that interest rates will not rise further.

But Powell warned that the central bank had little confidence that inflation was moving back towards its 2% annual target.

This came after producer price index (PPI) data read hotter than expected for April, potentially setting the stage for a strong consumer price index reading later on Wednesday.

Meanwhile, signs of dwindling capital flows into Bitcoin and crypto investment products, along with the threat of more regulatory action, kept optimism towards crypto markets limited.

Hong Kong crypto ETFs see bumper outflows 

Three spot Bitcoin and Ethereum exchange-traded funds in Hong Kong saw outsized outflows of nearly $40 million on Monday, wiping out two weeks of inflows since their debut on April 30.

While the immediate reason for the outflows was unclear, they also came as sentiment towards Hong Kong and Chinese markets soured amid increased U.S. trade tariffs on Beijing and mixed economic signals from China. 

Outflows from the Hong Kong ETFs came amid dwindling capital inflows into their U.S. counterparts, as hype over the approval of spot Bitcoin ETFs for U.S. markets ran dry.

While initial hype over their approval drove Bitcoin to record highs over $73,000 in early-March, the world’s biggest cryptocurrency has traded largely within a $60,000 to $70,000 trading range for the past two months, amid scant positive cues. 

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Bitcoin’s halving event passed with little price action, while threats of more regulatory action by the U.S. Securities and Exchange Commission also kept traders averse towards crypto markets. 

Crypto price today: Altcoins in the red ahead of CPI data

Apart from Bitcoin, broader cryptocurrency prices retreated, as traders turned more risk averse ahead of the U.S. CPI data.

World no.2 token Ethereum fell 0.25%, while Solana and XRP lost 1.6% and 1.1%, respectively.

Gains in meme stocks- such as GME and AMC- also inspired fleeting gains in meme tokens. Dogecoin fell more than 1.7%, while Shiba remained nearly flat.

Sticky U.S. inflation is likely to keep interest rates high for longer- a scenario that bodes poorly for crypto markets, which usually thrive in low-rate, high-liquidity environments.

Bitcoin fee reduction could prompt miner sell-off - analyst

Bitcoin miners slashed their coin inventory before the reward halving took effect on April 19, a trend that trend could soon resume as blockchain usage becomes cheaper, squeezing miners’ revenue.

"Daily average network fees spiked after the halving, offsetting some pain for bitcoin miners. However, fees have since come down as the initial rush of users to the Runes protocol cooled off," analysts at Kaiko said in a note.

"The recent decline in fees could lead to selling pressure from miners," they added.

The price of Bitcoin already faces downside risks from the long-defunct cryptocurrency exchange Mt.Gox's $9 billion payout to its creditors and further selling pressure from miners may exacerbate the situation.

Bitcoin miners generate revenue from two key sources – block rewards and transaction fees. They receive a fixed amount of BTC as a reward for adding new blocks to the blockchain, along with transaction fees for including transactions in the blocks they mine.

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Last month's halving reduced the per-block coin emission to 3.125 BTC from 6.25 BTC, putting the onus of compensating the negative impact on miner profitability on transaction fees and bitcoin's price.

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