Investors cheered lower-than-expected inflation data on Wednesday, sending Bitcoin back above $70,000 and sparking a rally across the cryptocurrency market.
The world’s leading cryptocurrency had fallen to $66,000 on Tuesday, its lowest point in three weeks, as anticipation grew surrounding the Federal Reserve’s monetary policy meeting.
However, news that inflation slowed in May compared to both the prior month and market estimates triggered a significant rebound.
Bitcoin surged nearly 5% by mid-day Wednesday, breaking above $70,000 again.
Other cryptocurrencies joined the rally, with Ethereum climbing 3.8% and some altcoins experiencing even steeper gains.
The total market capitalization for cryptocurrencies jumped 4% to $2.54 trillion.
The positive shift in investor sentiment appears directly linked to the US Labor Department’s release of inflation data.
Consumer inflation rose 3.3% year-on-year in May, falling below market expectations of 3.4%.
This follows a year-on-year increase of 3.4% in April. Monthly inflation figures also provided relief, showing no change compared to April’s 0.3% increase, exceeding analyst predictions of a 0.1% rise.
The cooler inflation data has fueled hope among investors that the Fed might signal its first rate cut when the central bank’s policy meeting concludes later on Wednesday.
This could provide a significant boost to the cryptocurrency market, which has been sensitive to interest rate fluctuations.
