The consumer price index for April came in softer than expected on Wednesday, sending bitcoin higher as investors see the chances of the Fed lowering interest rates more likely this year.
Inflation in April increased 0.3 percent from March, which was slightly below the economist estimate for 0.4 percent.
CoinDesk noted that bitcoin jumped 1 percent “in the minutes following the Wednesday morning report, rising to $63,700.”
Bitcoin was trading up $3,605.40, or 5.86 percent, to $65,148.20 as of 1:49 p.m. ET.
The Fed has kept interest rates hight to try to tame inflation, but when it decides to lower rates, the U.S. dollar will fall in value against other world currencies and become a more attractive investment for foreign buyers. Bitcoin is a non-yielding asset so it will become more attractive as Treasury yeilds falls.
Bitcoin slipped back in March when the CPI data came in hotter than expected.
Timothy Peterson, Cane Island Alternative Advisors founder and investment manager, told Cointelegraph yesterday that the U.S. high yield rate needs to drop below 6 or 7 percent “for a sustainable all-time high” for BTC.
The report, citing YCharts, noted that the current rate is 7.54 percent.