US inflation accelerated to 3.8% in April, its highest level since May 2023, according to Consumer Price Index (CPI) data released Tuesday by the US Bureau of Labor Statistics.
The hotter-than-expected reading strengthened the US dollar and Treasury yields, triggering a cautious risk-off reaction across crypto markets.
Energy Shock Pushes Inflation Past Forecasts
Prices rose 0.6% month-over-month, matching economist expectations, while the annual inflation rate came in above the projected 3.7%.
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The surge extends a sharp reversal from the 2.4% annual rate recorded before late-February US-Israeli strikes on Iran triggered an energy price shock. A sharp rise in energy costs linked to the escalating war in Iran reversed the cooling inflation trend seen earlier this year.
Markets responded with a classic risk-off move. The 10-year Treasury yield, a benchmark for mortgage rates, auto loans, and credit card debt, climbed more than 4 basis points to 4.459%, reflecting diminished expectations for near-term Fed easing.
Crypto ETFs felt the pressure directly: US spot Bitcoin ETFs logged a combined daily outflow of $233.25 million on Tuesday, with nearly every fund recording redemptions. Morgan Stanley’s MSBT was the sole outlier, attracting $6.02 million in net inflows.
Bitcoin Holds Ground; Broader Crypto Market Barely Moves
Despite the macro headwinds, digital assets showed relative resilience. Bitcoin (BTC) briefly dipped roughly 1–1.5% to around $80,500 before stabilizing in the $80,500–$81,000 range. Its 24-hour price change remained near flat at 0.1%, and BTC dominance held steady at 58.3%.
Ethereum (ETH) underperformed slightly, oscillating in a 2% band between approximately $2,280 and $2,340, ending the day with a marginal 0.2% move. The total crypto market cap edged up 0.1% to $2.78 trillion over 24 hours.
Open interest data painted a cautious picture: while aggregate open interest across all exchanges ticked up 0.39%, CME futures declined 1.30% and OKX fell 1.73%, suggesting institutional and derivatives traders are quietly reducing exposure.
Why This Matters
Above-forecast US inflation reduces the probability of near-term Federal Reserve rate cuts, a historically negative signal for risk assets including crypto. With ETF outflows rising and Treasury yields climbing, digital asset markets face a tighter macro backdrop that could suppress upside momentum in the weeks ahead.
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People Also Ask:
The Consumer Price Index measures changes in the average prices consumers pay for goods and services over time.
Higher inflation can influence Federal Reserve interest rate decisions, which impacts liquidity and investor appetite for risk assets like cryptocurrencies.
Rising Treasury yields often strengthen the US dollar and make safer investments more attractive, which can pressure crypto prices.
