Bitcoin Dips to $63K as Rate Cut Hopes Dim Following Disappointing U.S. Inflation Report

Bitcoin BTC$89,911.09 dropped briefly below $63,000 on Thursday as cryptocurrencies tumbled following fresh data showing hotter inflation and slower growth in the U.S. in the first quarter.

The U.S. government's preliminary report for first quarter GDP showed growth of just 1.6%, substantially lower than the 2.5% analysts estimated and down from 3.4% in the fourth quarter of 2023. Meanwhile, the GDP price index came in slightly hotter than expected at 3.1% and up from 1.6% in the previous quarter.

The disappointing inflation data report spooked investors, with hopes for interest rate cuts this year dimming further, hitting risk assets across all markets. Major U.S. stock indexes such as the S&P 500 and the tech-heavy Nasdaq began the trading session down nearly 2%, while the 10-year U.S. Treasury bond yield jumped 8 basis points to 4.73%, its highest reading since November.

BTC at one point slid more than 4%, hitting a $62,800 low before recovering to $63,700 recently. Ether ETH$3,055.14 was also down 4% during the same period, changing hands at around $3,100.

Altcoin majors tumbled even more, led by native tokens of layer-1 network's Solana SOL$133.13, Avalanche AVAX$13.41 and Aptos APT$1.7762, all of which fell 8%-9% before paring some of the losses. The broad-market benchmark CoinDesk 20 Index (CD20) declined 6%.

"The Fed is boxed in a corner after today’s worse-than-expected GDP report," Mike Cornacchioli, senior vice president for investment strategy at Citizens Private Wealth, said in an email to CoinDesk. "The data pushes back rate-cut expectations and investors are wondering whether the Fed will be able to cut rates at all in 2024, which has implications throughout financial markets."

UPDATE (April 25, 19:32 UTC): Adds analyst comment to the story.