Bitcoin is in a moment of high volatility

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Key points:

  • Bitcoin reached a new all-time high and then fell sharply by 5%.
  • Despite weak retail sales, the US PPI exceeded expectations.
  • The higher rate scenario is negative for risky assets like Bitcoin.

The Bitcoin rate showed volatile dynamics, dropping to its lowest value in a week. This happened against the backdrop of profit-taking by investors after the record growth of the cryptocurrency.

An additional factor that negatively affected the demand for Bitcoin was the unexpected acceleration of inflation in the United States. Rising inflation indicators have pushed back the prospects for rate cuts, which has reduced the attractiveness of risky assets, which include Bitcoin.

High volatility

The Bitcoin exchange rate has undergone significant fluctuations. After hitting a new all-time high of $73,803.25 for the fourth day in a row, the cryptocurrency plummeted more than 5% to hit a low of $66,629.96. The rate subsequently partially recovered, but at the time of the last trade was still 3.5% below the record value.

Market analysts note that volatility is a characteristic feature of Bitcoin, and sharp price fluctuations are often observed after the cryptocurrency reaches new record values.

Impact of the current statistical data

Despite weaker-than-forecast US retail sales in February, the PPI index, on the contrary, exceeded expectations. This, coupled with the PPI hitting a new high recently, indicates the Fed may not be as dovish as traders had hoped.

The PPI data complements US consumer price data released earlier in the week, which also indicated continued inflationary pressures.

In response to this news, markets lowered their estimates of the likelihood of the Fed’s easing cycle starting in June. Futures are now pointing to a 60% chance of a rate cut this month, up from 74% a week ago, according to CME FedWatch tool.

A scenario of higher and longer rates, especially in the US, is traditionally negative for risk-sensitive assets such as cryptocurrencies.

Isn’t it all that bad?

Despite market volatility, the price of Bitcoin has seen a 60% increase since the beginning of the year. This is partly due to inflows into US spot exchange-traded crypto products, as well as ongoing expectations for a decline in global interest rates by the end of the year.

MicroStrategy, known for its bullish view of the future of Bitcoin, has announced plans to raise capital through convertible bonds denominated in Bitcoin. On March 5, the company announced a $600 million private placement of such bonds, allowing it to increase its exposure to this fast-growing market.


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