The Consumer Price Index (CPI) for March in the United States, released last night, exceeded market expectations at 3.4%. After briefly dropping to the level of $67,200, the price of Bitcoin quickly rebounded and is currently trading above $70,000 as of writing this article.
In response to this, Zach Pandl, Head of Research at Grayscale, expressed confidence in the future prospects of Bitcoin in an interview with the media outlet Cointelegraph. He believes that with the US government’s continued excessive spending and maintaining high interest rates (budget deficit), value storage assets like Bitcoin will continue to be popular commodities. While the increase in interest rates may have a “short-term negative impact” on cryptocurrencies, the demand for value storage assets is expected to persist in the long term.
Furthermore, Zach Pandl pointed out that given the current high inflation rate, it is unlikely that the Federal Reserve will lower interest rates soon. However, the upcoming Bitcoin halving event, as well as economic growth and more use cases for cryptocurrencies, will drive further price increases for Bitcoin.
“With such a high core CPI, the Federal Reserve may not announce interest rate cuts soon, but the growth of nominal GDP, the Bitcoin halving event, and the adoption trends of tokenization should create a favorable environment for the cryptocurrency market.”
On the other hand, digital asset hedge fund QCP Capital also stated that this rebound demonstrates the potential demand for Bitcoin, with investors seeing the drop as a buying opportunity.
