First Mover Americas: Bitcoin Approaches $63K Ahead of U.S. CPI Data

BY Coindesk | ECONOMIC | 05/15/24 08:00 AM EDT By Jamie Crawley, Omkar Godbole

This article originally appeared in First Mover, CoinDesk?s daily newsletter, putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

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Bitcoin made some cautious gains on Wednesday ahead of the latest inflation data from the U.S. BTC is priced at $62,775 at the time of writing, up 1.8% in 24 hours. The wider digital market, as measured by the CoinDesk 20 Index (CD20), also ticked up, adding 0.55%. April's U.S. Consumer Price Index (CPI) inflation data is due at 08:30 ET, with expectations that it will show a 3.4% year-on-year increase, slower than March's 3.5%. Some analysts expect a softer-than-expected CPI reading could lift bitcoin above $65,000.

Latest News: U.S. CPI Softer Than Expected at 0.3% in April; Bitcoin Rises to $63.7K

Bitcoin's mean transaction fee has reversed the post-halving spike, squeezing miners' revenue. Miners earn revenue from two sources: block rewards and transaction fees. Miners receive a fixed amount of BTC as a reward for adding new blocks, along with transaction fees for including transactions in the blocks they mine. The spike, driven by the new Runes protocol, helped to compensate for the block reward being cut in half, but this proved to be short-lived. In response, miners may liquidate around $5 billion worth of BTC in the coming months, according to Markus Thielen, head of 10x Research. "Why would they keep inventory when the price is not going up?" Thielen said.

Broker Canaccord Genuity (CCORF) expects Galaxy Digital's (BRPHF) positive momentum to continue after the crypto financial services firm reported an increase in net income of 40% on Tuesday. Galaxy saw an increase in the number of trading counterparties with trading revenue rising 79%, Canaccord noted in a report, citing the approval of spot bitcoin ETFs in the U.S. as the major catalyst. Mike Novogratz?s firm also increased its proprietary mining hashrate and the Helios facility ?presents an opportunity for Galaxy to pursue both mining and AI hosting over time,? the broker said. Galaxy's Toronto-listed shares fell 1.12% on Tuesday to close at C$12.41.

Chart of the Day

(Bank of America)
  • The chart shows that a record 55% of respondents in Bank of America's (BAC) latest survey of global fund managers with $562 billion in assets under management see global fiscal policy as "too stimulative."
  • The increased government spending, though positive for risk assets, including cryptocurrencies, could eventually add to inflationary pressures.
  • Over 40% of fund managers see inflation as the top-tail risk.
  • Source: Bank of America (BAC)

- Omkar Godbole

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.