Bitcoin Reaches New Two-Week High Ahead Of U.S Inflation Data

Bitcoin extended its gains on Wednesday despite the impending U.S. inflation data that could amplify fears of an early unwinding of monetary stimulus by the Federal Reserve.

The token reached a two-week high of $55,822 (N26,236,340) earlier today, after a five-day winning streak, clawing its way back from a heavy selloff that took prices below $47,000.

READ MORE: Bitcoin Attains Longest Winning Streak Of The Year

The U.S. Consumer Price Index (CPI) which is scheduled for release at 14:30 WAT today, is expected to show the cost of living in the world’s largest economy rose 0.4 percent in February from 0.3 percent in January. In annualized terms, the CPI is forecast to have risen to 1.7 percent from 1.4 percent in January.

The data could influence bitcoin’s price, given the cryptocurrency is considered a hedge against inflation and monetary and fiscal policy imprudence. While a bigger-than-expected jump in inflation would strengthen bitcoin’s long-term bullish case, although the cryptocurrency’s immediate reaction could be bearish.

The CPI, being in line with the above forecast would validate the narrative that the cocktail of monetary and fiscal stimulus, alongside an economic rebound, is stoking inflation. That could lead to an early tightening of stimulus by the Fed and another leg higher in Treasury yields and the U.S. dollar.

At press time, bitcoin is trading around $55,000, representing a 1.7 percent gain on a 24-hour basis. The 10-year yield is seen at 1.56%, having risen by more than 50 basis points to above 1.6% in the past five weeks.