Bitcoin posts biggest single-day gain in two months as US inflation cools

bitcoin rose more than 7.5% to surpass $66,000 on Wednesday, marking its biggest single-day gain in nearly two months.

The gain was sparked by US CPI data showing inflation had eased to 3.4% in April from 3.5% the previous month.

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The US headline CPI fell to 3.36% year-on-year in April from 3.48% in March. US inflation has now been above 3% for 37 consecutive months.

The US core CPI (excluding food and energy) fell to 3.62% year-on-year from 3.80% last month. This is the lowest core inflation reading since April 2021. pic.twitter.com/PBBRPMYAM1

—Charlie Bilello (@charliebilello) twitter.com/charliebilello/status/1790724771237318930?ref_src=twsrc%5Etfw”>May 15, 2024

As inflation falls, markets are increasingly optimistic that the US Federal Reserve could begin cutting interest rates. Doing so will increase investors' appetite for risky assets like btc.

bitcoin added to yesterday's gains and was up 5.7% at $66,239 at 06.08 am EST.

Fed Could Cut Rates as Inflation Eases

April Consumer Price Index (CPI) data has changed market expectations for Fed rate cuts.

Data of the CME FedWatch Tool shows that 72% of traders expect the Fed to cut rates during the September 2024 policy meeting.

In addition to the Federal Reserve, other central banks in developed economies are also reducing borrowing costs. In March, the Swiss National Bank became the first major economy to cut interest rates after a long period of monetary adjustment.

If central banks adopt further rate cuts, market liquidity will improve, giving investors more confidence to diversify into riskier assets such as cryptocurrencies.

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