Bitcoin Rebounds as Bargain Buyers Step In, but Gains Limited by Inflation Data Concerns

Bitcoin’s price rose by 3.4% on Tuesday, reaching $56,715.3 at 01:16 ET (05:16 GMT), as bargain hunters moved into cryptocurrency markets after last week’s steep losses. However, the rebound was restrained by caution ahead of key U.S. inflation data expected this week, with ongoing capital outflows indicating that overall market sentiment toward crypto remains weak.

The cryptocurrency market had been hit hard the previous week, with Bitcoin dropping as low as $52,000 due to growing concerns over an economic slowdown. Despite this decline, Bitcoin managed to recover slightly in the last two sessions, supported by bargain buying as institutional investors pulled back from crypto.

Data from digital asset manager CoinShares showed that the market experienced its largest weekly outflow since March, totaling $726 million, driven by fears of slowing growth and expectations of a modest interest rate cut by the Federal Reserve. This risk-off sentiment led traders to increase short positions in Bitcoin and sell off altcoins across the board.