U.S. CPI Surpasses Expectations, Dyes the Market Red

The latest Consumer Price Index (CPI) announcement from the Federal Reserve has shattered Wall Street's expectations of multiple interest rate cuts in 2024.

U.S. CPI Surpasses Expectations, Dyes the Market Red

Once again, inflation figures disappoint, with the March 2024 Consumer Price Index (CPI) rising higher than expected, casting doubt on the Federal Reserve's hopes for interest rate cuts in the coming months.

The U.S. CPI figures for March 2024 are as follows:

CPI 3.5%, up from February's 3.2%, and higher than the expected 3.4%.

Core CPI 3.8%, unchanged from February, but exceeding the expected 3.7%. This figure remains nearly double the Fed's long-term inflation target.

In addition to the inflow from spot ETFs and the upcoming Bitcoin halving event in April, looser monetary policies in the U.S. are also anticipated to act as catalysts for Bitcoin price increases in 2024.

Fed's unchanged interest rates in 2023 - 2024: June | September | November | December | February | March
With expectations that the Fed will execute around 5-6 interest rate cuts in 2024, but inflation, which steadily declined through much of 2022 and 2023, has not followed suit. In fact, inflation has slightly increased in the first quarter and remains significantly above the U.S. Central Bank's 2% target.

Several Fed members have explicitly stated they are not inclined to begin monetary policy easing until they see sustained inflation declines, implying that the metrics must outperform monthly reports.

Meanwhile, traders swiftly reduced their expectations of rate cuts, revising predictions from 5-6 cuts down to only 2-3 for the year, with the first adjustment likely occurring in June or July.

Following this news, Bitcoin experienced a sharp decline of $1,440, dropping from $69,000 to $67,559, representing a decrease of over 2% in value. Altcoins also rushed into "red territory," recording declines ranging from 5-10%. Overall, the world's largest cryptocurrency is still expected to rebound, amidst the upcoming Bitcoin Halving and SEC's anticipated approval of Ethereum spot ETFs.

15-minute chart of BTC/USDT pair on Binance at 08:30 PM on April 10, 2024

In the last 4 hours, $92 million worth of derivative orders were liquidated, with 83.6% being long positions.

Traditional markets also received negative figures, with S&P 500 and Nasdaq 100 futures contracts both falling by about 1.5%. The yield on the U.S. 10-year Treasury bond surged by 13 basis points to 4.50%, and the U.S. dollar index sharply declined by 0.5%. Gold, which has been setting near-daily record highs recently, fell by 0.5% to $2,352 per ounce.