Cryptocurrency markets have been volatile over the past weeks, with Bitcoin's price surging after Tesla announced a $1.5 billion investment in the digital asset. Nevertheless, the sudden inflation data release triggered a brief surge in Bitcoin just minutes after its release.

The U.S. Bureau of Labor Statistics reported that both the "headline" and core inflation, which strips out volatile items such as food and energy, rose in March to 4.2% and 5.6%, respectively, year-over-year.

This increase in inflation — the highest since 2008 — indicates that price pressures within the U.S. economy may be becoming more entrenched and sluggish. This has been taken as a sign that the U.S. Federal Reserve (Fed) will not be reducing interest rates in the near future, and may in fact increase them.

The immediate response to the inflation data release was that stocks surged, while Bitcoin's price rose as far as $30,450 before coming back down to earth. The Fed Funds futures pricing now shows a 67% probability of a 25 basis point hike in rates at the next meeting, down from 73% earlier — and a 47% likelihood of a rate cut by July.

Overall, the news of the inflation is positive, as it could mean that a sustained and steady increase in prices might be on its way. Certainly, the rise indicates that the U.S. economy is strong, and the next move by the Fed will be dictated by how the economy holds up. In the meantime, as the markets wait for more news, it appears that Bitcoin's price may have taken a breather after the brief surge earlier.



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