In March, the consumer price index in the United States rose by 3.5%, prompting a reaction from Bitcoin. The cryptocurrency experienced a sharp drop, falling to approximately $67,500. According to the U.S. Department of Labor, inflation surged by 0.4% on a monthly basis, a significant increase compared to the previous month of February. This marked the third consecutive month of rising inflation rates since January.
Following the release of the inflation data, Bitcoin’s price dipped below $68,000, leading to a significant drawdown and a wave of liquidations in futures contracts. CoinGlass data showed liquidations totaling $311 million, with a notable prevalence of long positions.
As of now, Bitcoin is trading at around $67,700, showing a slight recovery from its recent decline. Trading volumes have also increased by 7% to $35.6 billion over the past 24 hours.
The consumer price index is a measure of inflation, indicating the loss of purchasing power for fiat currencies like the dollar when CPI values rise. While some view Bitcoin as a safe haven for capital, the correlation between CPI and Bitcoin’s price is not always straightforward due to the volatile nature of the digital asset market.
Analysts at QCP Capital suggested that Bitcoin could undergo a correction in the medium term as a result of escalating inflation rates in the U.S. They forecasted a decrease in capital inflows into the spot Bitcoin ETF sector, leading to a drop in asset prices below $61,000 when the indicator shifted to the red zone.