Bitcoin Slips Below $80K After US Inflation Hits 3.8% and Rate Cut Hopes Fade

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Key takeaways

Stalled negotiations and regional stability

Bitcoin The price briefly fell below $80,000 on May 12, as global markets reacted to President Donald Trump’s warning that the ceasefire between the United States and Iran was “on life support.” After testing the $82,000 mark on Monday afternoon, the high cryptocurrency showed signs of weakness, dropping to $80,900.

Although bitcoin quickly rebounded to trade above $81,000 In the early hours of Tuesday, it was unable to maintain the level and fell back below the threshold around 4 a.m. EDT. From this point, the cryptocurrency began a gradual decline that erased almost all of the gains made over the previous 48 hours. At 12:54 p.m. EDT, bitcoin had fallen to an intraday low of $79,820 before quickly recovering to $80,500.

Therefore, the 1.6% drop over 24 hours resulted in the cryptocurrencyThe market capitalization fell to $1.61 trillion.

Speaking to reporters shortly after receiving the Iranian proposal, which he deemed “unacceptable,” President Trump reiterated the argument that Tehran is dragging the United States and does not appear interested in reaching a deal. This latest impasse in negotiations is seen as a strengthening of hawks in Washington who favor a return to full combat operations.

However, a return to fighting would ensure that the Strait of Hormuz, where traffic has slowed to a crawl since the start of the conflict, remains closed. As Aramco’s CEO warned, this outlook means the oil market and prices won’t stabilize until at least 2027. This warning puts the Trump administration and the Republican Party in a bind, as rising oil prices for the rest of the year will likely hurt their chances in the midterms in November.

Growing geopolitical tensions in the Middle East are not the only factor weighing on markets. The release of the Consumer Price Index (CPI) in the United States in April datawhich showed inflation the increase to 3.8% against 3.7% forecast, dampened hopes of a rate cut. As expected, energy prices, particularly gasoline, were the main culprit. The Producer Price Index (PPI) report, scheduled for release on May 13, is the next major catalyst to watch, as it will indicate whether these price pressures continue to build at the manufacturing level.

In the meantime, bitcoinThe 24-hour price action saw $57 million in long bets liquidated against $7.5 million in short bets. Overall, the cryptocurrency The market saw nearly $280 million in leveraged positions liquidated, with long bets accounting for around $232 million.