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Bitcoin Records Its Largest Single-Day Gain in Two Months On Cooling US Inflation

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Bitcoin soared after CPI data was released
Bitcoin soared after CPI data was released

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Bitcoin rose by over 7.5% to above $66,000 on Wednesday, marking its largest single-day gain in nearly two months.

The gain was sparked by US CPI data that showed inflation had eased to 3.4% in April from 3.5% a month earlier.

As inflation drops, markets are increasingly optimistic that the US Federal Reserve might start trimming interest rates. Doing so will boost investor appetite for risk assets such as BTC.

Bitcoin is adding to yesterday’s gains and is up 5.7% at $66,239 at 06.08 a.m. EST.

Fed Could Trim Rates as Inflation Eases

The April Consumer Price Index (CPI) data has shifted market expectations on Fed rate cuts.

Data from the CME FedWatch Tool shows that 72% of traders expect the Fed will trim rates during the September 2024 policy meeting.

Besides the Fed, other central banks from developed economies are also lowering borrowing costs. In March, the Swiss National Bank became the first major economy to cut interest rates after an extended period of monetary tightening.

Should central banks pivot to more rate cuts, market liquidity will improve, giving investors more confidence to diversify into riskier assets like crypto.

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