Stephanie Douse 
Bitcoin (BTC) fell below $30,000 on Wednesday, just minutes after data showing April inflation in the United States was more than predicted.
BTC plunged more than 6% from intraday highs, reaching a low of $29,100. Following the reading, other major cryptocurrencies went negative for the day. Ethereum is currently trading at a loss of over 7%. While Binance Coin and Ripple are down 16% and 20%, respectively.
The sudden drop in BTC parallels the decline in U.S. stock futures, which all turned negative after data revealed the U.S. consumer price index (CPI) climbed 8.3% in April, exceeding estimates of 8.1%.
United States CPI data reflects inflation is nowhere near decreasing
While the CPI data was lower than March’s 8.5% estimate, indicating that inflation is nearing its peak. This indicates that prices will take considerably longer to calm down than previously believed.
The strong inflation reading also suggests that the US Federal Reserve and other central banks will continue to raise interest rates this year, which is bad news for crypto markets.
The U.S. CPI data has brought enormous amount of anxiety among traders as the number shows that inflation is no way close enough to cool off. Looking at the numbers, it seems that it is not only the Fed who will need to do a lot to control inflation but the Biden Administration also needs to do a lot more.
After the Fed raised interest rates last week, BTC was already under pressure. The token is projected to drop to $28,000 as a result of this new development, which could lead to even greater selling pressure.
Following a prolonged period of easy monetary policy, inflation has risen sharply this year. Economic shocks resulting from the Russia-Ukraine conflict have also compounded the problem.
More losses are expected in the Bitcoin and cryptocurrency markets.
Fears of Fed tightening have dominated much of crypto trading this year. Which resulted in a more than 50% decrease in BTC from near-record highs. This year, total crypto market capitalization has dropped by about $800 billion and is at around $1.4 trillion.
For the majority of Wednesday, BTC had been in a holding pattern in anticipation of the CPI report.
As traders prepare for higher interest rates this year, the crypto market is set to face greater pressure.