Bitcoin (BTC) surged past $66,000 for the first time in three weeks, fueled by lower-than-expected inflation data from the U.S. Bureau of Labor Statistics. The broader cryptocurrency market followed suit, with Ethereum (ETH) surpassing $3,000 and altcoins experiencing significant gains.

Key Drivers of the Bitcoin Rally

• Softer-than-expected CPI: The April Consumer Price Index (CPI) came in at 0.3%, below analyst estimates of 0.4%. This data suggests a potential slowdown in inflation, easing concerns about aggressive interest rate hikes from the Federal Reserve. Lower interest rates are generally seen as positive for riskier assets like Bitcoin.
• Institutional Inflows: Positive inflows into spot Bitcoin ETFs are contributing to bullish sentiment. The U.S. spot Bitcoin ETFs saw a daily net inflow of $100.5 million on May 14, with ARKB recording the largest inflows.
• State of Wisconsin Investment: The State of Wisconsin Investment Board revealed a $164 million investment in spot Bitcoin ETFs, highlighting growing institutional interest in cryptocurrency.

Market Reactions

• Bitcoin Price: Bitcoin surged over 7% in the last 24 hours, breaching the resistance at the 50-day EMA and flashing bullish signals on multiple timeframes. Analysts predict potential targets of $68,000–$69,000 but warn of resistance at these levels.
• Altcoin Performance: The broader crypto market followed suit. Ethereum gained nearly 5%, while AI tokens, particularly Near Protocol (NEAR) and The Graph (GRT), witnessed impressive gains exceeding 11% and 14% respectively.

Other Notable Market Developments

• Short Squeeze: The rally triggered liquidations exceeding $150 million, with short positions being squeezed heavily. This indicates a shift in market sentiment towards bullish positions.
• Open Interest: Bitcoin Futures Open Interest reached a one-month high of $32 billion, reflecting increased speculative activity.
• Stock Market Rally: The U.S. stock market also reacted positively to the CPI data, reaching record highs. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed at record levels.

Overall, the lower-than-expected CPI data has injected optimism into both the cryptocurrency and traditional investment markets. Bitcoin’s surge and the strong performance of AI tokens highlight the potential for further growth in the crypto space. However, with key events like the upcoming NVIDIA earnings report on the horizon, investors should remain cautious of potential market fluctuations.