Bitcoin price rallies amid US inflation figures and ETF inflows

People walk past a cryptocurrency exchange in Hong Kong on April 15, 2024. In April miners of bitcoin will face a halving of the reward for operating the most popular cryptocurrency, in a pivotal event that is a test of survival, industry commentators say. (Photo by DALE DE LA REY / AFP) (Photo by DALE DE LA REY/AFP via Getty Images)
Bitcoin is now priced at over $66,000. (DALE DE LA REY via Getty Images)

Bitcoin rallied above $66,000 (£52,100) on Thursday, after softer US consumer price index (CPI) data for April and an increase in exchange-traded fund (ETF) inflows.

The April CPI data, published on Wednesday by the US Bureau of Labor Statistics, showed a year-over-year gain of 3.4%, slightly below March's 3.5% increase.

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The value of bitcoin (BTC-USD) has increased over 6% in the past 24 hours to $66,178 at the time of writing. Other crypto tokens, such as ether (ETH-USD) and solana (SOL-USD), have increased by 3.5% and 13% respectively, according to Coingecko data.

US stocks saw an uptick in trading on Wednesday. The Nasdaq Composite (^IXIC) had increased by 1.40%, while the NYSE Composite (^NYA) had gained 0.87%.

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According to the CME's FedWatch tool, interest rate traders now anticipate the Fed will maintain rates at current levels in June before potentially cutting rates for the first time in September. The FedWatch forecast indicates a 97.1% chance of rates remaining unchanged in June and a 69% chance in July. Interest rate traders, however, assign a 53.5% likelihood of a rate cut in September.

Spot bitcoin ETFs in the US saw a total daily net inflow of over $302m on Wednesday, the highest since 3 May. Fidelity’s (FBTC) led inflows with $131m, followed by the Bitwise Bitcoin ETF (BITB) with $86m, according to SoSoValue data.

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Ark Invest and 21Shares’ (ARKB) drew in $39m, while bitcoin ETFs managed by Valkyrie, VanEck, Franklin Templeton, WisdomTree, as well as Invesco and Galaxy Digital, reported single-digit net inflows.

The inflation data comes as MicroStrategy (MSTR), a company renowned for accumulating approximately $13bn worth of bitcoin, being included in a major global equity index, the MSCI World Stock Index. This inclusion follows a rise in the value of the company’s shares, which have even outpaced the gains made by bitcoin over the past year to date.

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MicroStrategy has come to be viewed as a proxy for bitcoin due to the firm's substantial investments in the digital asset. The company is now among the three largest additions to the MSCI World Index based on market capitalisation, according to a Bloomberg report on Wednesday.

This change highlights the increasing infiltration of crypto exposure into traditional portfolios, considering that many billions of dollars track or are benchmarked against MSCI’s World Index (XWD.TO).

Additional avenues for traditional market participants to gain exposure to bitcoin include US spot bitcoin ETFs, which have been available since their approval in January, and the newly approved Hong Kong ETFs.

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