The impact of inflation, interest rates, and the stock market on Bitcoin’s price

Hey there! Have you ever wondered what factors can impact Bitcoin’s price besides crypto-related news?

Sometimes, Bitcoin’s price can take unexpected jumps or dips without any warning.

And many times, these fluctuations are caused by larger macroeconomic and global events that are beyond the control of BTC itself, rather than directly linked to the cryptocurrency’s performance.

Let’s take a closer look at the data and trends that have a significant influence on how this digital asset performs.


With the recent spikes in the cost of living in the U.S., U.K., and other places, inflation has become a key indicator of economic health in major economies.

The Federal Reserve and the Bank of England typically aim for a 2% target for the Consumer Price Index, but this shifted during the pandemic, with American CPI hitting an incredible 9.1% in June 2022 and double-digit highs of 11.1% in the U.K. in October of the same year.

Bitcoin enthusiasts often refer to inflation in traditional currencies as a silent thief due to its impact on purchasing power, highlighting that BTC has a limited supply of 21 million coins.

While you might think that higher-than-expected CPI readings would be positive for Bitcoin’s price, the reality can be quite different.

For example, when CPI reached 3.4% in May 2024, lower than anticipated, Bitcoin surged from $62,650 to $65,000 in just four hours, alongside record highs on Wall Street.

Let’s dig deeper into the reasons behind this price movement.

How inflation, interest rates and the stock market affect Bitcoin's price - 2

Bitcoin in 24 hours on May 14-15 | Source: CoinMarketCap

Interest rates

Since Bitcoin’s inception in 2009, the Federal Reserve’s interest rates have fluctuated significantly, impacting the cryptocurrency’s performance. When interest rates rise, interest in riskier assets like Bitcoin tends to decline, as investors can find more stable returns elsewhere.

Analysts anticipate that a decrease in interest rates could be beneficial for Bitcoin’s price. In March 2024, Deutsche Bank strategists suggested that investments in cryptocurrencies could increase as returns on traditional assets like Treasury decline.

The stock market

The relationship between Bitcoin and major indices like the S&P 500 or Nasdaq 100 is noteworthy, especially with the introduction of exchange-traded funds linked to Bitcoin’s spot price in U.S. markets.

Global events, such as unrest in the Middle East, have had a significant impact on Bitcoin’s value in recent times. For instance, when Iran launched an attack on Israel, Bitcoin initially dropped before rebounding.

While specific factors like halvings and adoption news can boost Bitcoin, the cryptocurrency’s value is also intertwined with the traditional dollar-based economy it was created to challenge.

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