Bitcoin price reaches a $73K high and defies ‘hot’ CPI

Inside the ‘hot’ March CPI: Energy tax vs. core relief

The Bureau of Labor Statistics reported that headline CPI jumped to 3.3%, a two-year high. Gasoline prices accounted for nearly 75% of the total monthly increase. 

On a regular ‘bad news’ day, the data would send BTC prices downwards. But BTC was seen tagging a high of $73,000.

The silver lining lies in the core CPI, which rose by a modest 0.2% monthly. The lower-than-expected core figure highlights how the energy spike caused by the Middle East conflict is not yet leaking into other sectors like housing or services. 

For crypto investors, the current inflation may come across a temporary byproduct of war rather than a systemic failure of the economy.

Why BTC ticked up instead of tanking

A 3.3% CPI print paired with a near-zero probability of an April rate cut would have led to a sell-off. However, BTC appears to be decoupling from the Federal Reserve’s ‘higher for longer’ influence due to complications in peace efforts.

The April 7 ceasefire might have technically ‘reopened’ shipping, but it came with a ‘Crypto Toll’ system in which vessels have to pay up to $2 million in BTC or stablecoins for safe passage through the Strait of Hormuz.

The development turned BTC into an utility asset for global trade, owing to unprecedented in-kind demand from maritime insurers and shipping conglomerates.

If the Islamabad talks succeed in keeping the Strait of Hormuz open, the gas hike may deflate, bringing the headline CPI closer toward the Fed's 2% target, without the need for further aggressive rate hikes.

BTC price: Attempting to turn $72,500 into support

BTC’s technical structure has successfully completed a ‘bullish divergence’ from the macro data. After a brief knee-jerk dip to $70,500 at the time of the release, BTC surged to test the $73,000 mark.

As the inflationary pressures are biased towards a single sector (energy), the prospects of a diplomatic resolution appears to be negating the Fed's ‘higher for longer’ effects.

BTC’s continued run above $70,000 would depend on the productivity of the peace talks, as well as the April 13 return of the U.S. Senate for potential CLARITY Act progress.

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