Investing.com — Bitcoin price rose on Wednesday, extending an overnight rally as risk sentiment improved amid growing bets on a deeper U.S. interest rate cut, with attention focused on upcoming inflation data.
The index rose 3% to $61,024.7 as of 01:19 ET (05:19 GMT), having recouped all of the heavy losses recorded during last week's market rout.
But further gains for Bitcoin were still limited as institutional inflows to the token remained restricted, while uncertainty over the regulatory outlook for cryptocurrencies in the US also weighed.
Bitcoin extends rally as weak CPI data boosts sentiment
Gains in Bitcoin and broader cryptocurrency markets were driven primarily by softer-than-expected inflation data on Tuesday.
The reading raised hopes that the data, due out on Wednesday, will improve as expected. More moderate inflation gives the Federal Reserve more room to begin cutting interest rates.
Bets on a 50 basis point cut rose slightly after Tuesday's PPI reading, although traders were still pricing in the possibility of a 25 basis point reduction.
Lower interest rates bode well for cryptocurrency markets as they increase liquidity that can flow into speculative markets such as cryptocurrencies.
But despite this week’s rally, Bitcoin still remained close to a trading range seen for most of this year as it struggled to reach new highs following a rally in March. The token has also largely lagged behind a rally in equity markets in recent sessions.
Cryptocurrency’s underperformance came amid renewed regulatory uncertainty in the United States, as polls showed a tight presidential race between Donald Trump and Kamala Harris. Trump has maintained a pro-crypto stance, while Harris has not addressed the industry.
Mt Gox distributions continue
Bitcoin's recovery was also held back by reports that a wallet that had received $2 billion in Bitcoin from defunct cryptocurrency exchange Mt Gox had initiated a test transaction on Tuesday.
It is unclear how many bitcoins the platform holds, but selling pressure on bitcoins is expected to increase as it returns tokens stolen from customers during a 2014 hack.
Cryptocurrency prices today: altcoins gain ground
Cryptocurrency prices generally rose following the strength of Bitcoin, but gains in most major altcoins were limited.
The world’s No. 2 token rose 2.6% to $2,720.45, while Ethereum rose 1.8% and Ethereum fell 0.6%, respectively.
Among meme tokens, it rose by 0.4%.
