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Bitcoin was waiting for cuts
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A hotter-than-expected inflation report could pressure Bitcoin by delaying Fed rate cuts and tightening liquidity.
Key facts
- Bitcoin declined on May 12, briefly losing $80,000, but recovered and traded between $81,000 and $80,000
- Mena stated that a clean daily close above $82,000 opens the path to $85,000 and a retest of the $88,000-$90,000 zone, particularly if the CLARITY Act markup clears without a major setback
- The Bureau of Labor Statistics (BLS) reported on May 12 that headline CPI rose 3.8% year over year in April, above the 3.7% consensus estimate and the highest annual reading since January 2024
- The Federal Reserve left rates at 3.50%-3.75% on Apr. 29
Summary
A hotter-than-expected April inflation report has put Bitcoin back at the center of the Federal Reserve trade, reviving the higher-for-longer rates problem that has capped crypto markets for much of the year. The Bureau of Labor Statistics (BLS) reported on May 12 that headline CPI rose 3.8% year over year in April, above the 3.7% consensus estimate and the highest annual reading since January 2024. Core CPI, which strips out food and energy, rose 2.8% year over year and 0.4% month over month. These reactions are a common near-term bearish setup for Bitcoin, as higher yields make Treasuries more competitive and compress tolerance for risk assets.