Better-than-Expected US CPI Figures Rattle Bitcoin, Alternatives Seen in Hong Kong ETF Launch and Gold Investments

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The recent announcement of United States Consumer Price Index (CPI) figures far better than market pundits’ expectations, dated April 10, has sent tremors through the globe’s financial market space. The most notorious repercussion was seen as a decline in Bitcoin and most crypto assets, which only added to the losses seen a day earlier, on April 9. This financial shakeup has undoubtedly jarred the optimism of cryptocurrency enthusiasts.

Based on April 10 data from Trading Economics, the CPI, a vital determinant of inflation, leaped by 0.4% in March, escalating the annual inflation rate to 3.5%. Strikingly, this outstripped economists’ forecasts and, more crucially, quashed expectations for the Federal Reserve to aggressively cut rates in the ongoing year.

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Amid the encroaching fear and uncertainty rippling through the Bitcoin and broader crypto market, a glimmer of hope emerged in a counter perspective offered by Matt Hougan, chief investment officer of Bitwise Asset Management. Hougan’s opinion suggested that the CPI data might not have a profound long-term impact on Bitcoin’s course.

Hougan proposed that for a more accurate market pulse, investors and traders should focus attention on other market aspects, such as spot Bitcoin exchange-traded fund (ETF) inflows and the ascent of government deficits. By his assessment, these elements can incrementally influence price, potentially causing Bitcoin to rise, as they currently seem to do.

Thus, even in the shadow of Bitcoin’s downturn, the setback could inadvertently create acquisition opportunities for long-term holders. Some followers even conjecture that the strong CPI data only reveals the susceptibility of fiat currencies and might encourage investors to use Bitcoin as a financial safeguard.

Adding to this optimistic outlook is the secure demand for gold, a preferred investment asset known for its value preservation in conventional finance. As the tide of inflation swells, analysts are forecasting that Bitcoin could emulate a similar trajectory to gold in preserving asset value.

More fuel to the bullish flame comes from the anticipation of a spot Bitcoin ETF launch in Hong Kong before month’s end. The Hong Kong Securities and Futures Commission has been evaluating multiple applications, including entries from eminent Chinese asset managers. Should this innovative product receive the nod of approval, it could draw more capital towards Bitcoin, thus amplifying inflows from the United States.

At the time of writing, Bitcoin maintains equilibrium but continues to endure strain, with losses recorded on April 9 now established. Analysts predict that if bullish buyers fail to nudge prices above recent all-time peaks of roughly $74,000, the coin may see a reduction.

However, on more of a technical note, Bitcoin remains in a broader bullish pattern, encapsulated in an upward facing wedge. This verbalized bullish outlook will only be nullified if prices plummet below $61,500 in upcoming trading sessions.