Bitcoin hits $66,000 as soft inflation data sparks cryptocurrency rally

The Swiss blockchain company said that weak retail sales in the United States and softer inflation data open the way for the next wave of cryptocurrency gains. Bitcoin prices climbed on May 15 to their highest since April 24, with Solana (SOL) and NEAR leading the cryptocurrency rally. According to the Swiss blockchain company, Bitcoin is expected to target a rise to $84,000, while other altcoins are performing well.

On Wednesday, the cryptocurrency market rallied on the back of lower-than-expected U.S. inflation data. Bitcoin (BTC) topped $66,000 for the first time since April 24, rising more than 7% in the last 24 hours. Ethereum (ETH) was trading at around $3,000 but underperformed during the same period, rising only 4%. Solana (SOL) and NEAR led the gains among the major cryptocurrencies, rising 8% and 12% respectively, while the broader market benchmark CoinDesk 20 Index (CD20) rose 6%.

The rally came despite a slightly lower April consumer price index (CPI) reading than in March, coupled with a slightly softer retail sales report. The data brought relief to investors worried that a reacceleration in inflation and a red-hot economy could force the Federal Reserve to pull back on its dovish policies or even consider raising interest rates.

"Investors believe this marks a bullish regime shift as it marks the first decline in CPI inflation in the last three months," Bitfinex analysts said in a market update. Bitfinex added that this, along with the Federal Reserve's previously announced plans to reduce the central bank's balance sheet, "is seen as a positive data for risk assets."

In terms of traditional markets, US stocks also rose on the day, with the S&P 500 up more than 1% and hitting a record high, underscoring the return of risk appetite. The Swiss blockchain company said in a Telegram update that Bitcoin's surge today also marks a break from the downtrend that has weighed on prices over the past few weeks.

The analyst firm said the breakout opens the way for bitcoin to first rise to $69,000 and then possibly move toward a new all-time high of $84,000. In the next wave of gains, "altcoins will follow strongly," the report added.