Bitcoin tumbled below $48,500 after figures showed inflation in the US fell by less than expected in January to 3.1%
The price of bitcoin swung wildly as investors fretted about the outlook for interest rates in the United States.
The world’s largest cryptocurrency rose as high as $50,383 in early trading – a level last seen in December 2021 – taking gains in the past three weeks to almost 30 per cent.
But it then tumbled back below $48,500 after official figures showed inflation in the US fell by less than expected in January to 3.1 per cent.
Bitcoin has rallied strongly this year over hopes that the Federal Reserve, the US central bank, will start cutting interest rates.
It was buoyed last month by the US Securities and Exchange Commission decision to approve exchange-traded funds designed to track its price.
It has more than tripled in value since crashing below $16,000 in November 2022 but remains some way off the 2021 peak of close to $70,000.
Craig Erlam at trading firm Oanda said: ‘Just as bitcoin managed to climb above $50,000 for the first time since 2021, it had the rug pulled from underneath it by a nasty US inflation report.
While damaging in the short run, I don’t think it will dampen the mood in the crypto space too much.’