Bitcoin drops below $63,000 as rate cut hopes dim

Ether was also down 4% during the same period, trading at around $3,100

Bitcoin declined briefly below $63,000 on Thursday as crypto currencies dropped after the latest 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. In the meantime, 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 reductions this year dimming further, hitting risk assets across all markets. Major U.S. stock indexes like the S&P 500 and the tech-heavy Nasdaq began the trading session 2% lower, while the 10-year U.S. Treasury bond yield climbed 8 bps to 4.73%, its highest since November.

Bitcoin at one point slipped more than 4%, touching a $62,800 low before recovering to $63,700 recently. Ether was also down 4% during the same period, trading at around $3,100.

Altcoin majors declined even more, led by native tokens of layer-1 network's Solana, Avalanche and Aptos, all of which dropped 8%-9% before paring some of the losses. The broad-market benchmark CoinDesk 20 Index (CD20) dropped 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, stated to CoinDesk.

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