Bitcoin Drops 1.3% to $102,422.5 Amid Trade Tensions Easing

Bitcoin experienced a decline on Thursday, dropping to $102,422.5 by 02:02 ET (06:02 GMT), marking a 1.3% decrease. Despite this slip, the cryptocurrency managed to hold above the critical $100,000 level, supported by optimism surrounding easing trade tensions between the world's two largest economies. This optimism was fueled by a joint statement released on Monday, where the U.S. and China agreed to temporarily roll back tariffs, alleviating fears of a global economic downturn. Additionally, the U.S. consumer price index data released on Tuesday came in below expectations, further easing concerns over inflationary effects from trade tariffs.

These developments have reinforced expectations of a Federal Reserve interest rate cut this year. However, caution persists among investors due to lingering concerns over potential reacceleration in inflation amid tariff risks. Analysts have cautioned that the central bank is likely to prioritize taming inflation and wait for clear signs of economic deterioration before cutting rates. This cautious sentiment is further amplified as markets await the upcoming U.S. Producer Price Index (PPI) data, which is expected to provide more insights into inflation trends.

Despite the recent decline, Bitcoin's price has been buoyed by a broader increase in risk appetite across global markets. This increased appetite for risk is a result of the easing trade tensions and the positive economic data released this week. However, the rally has been kept in check by the lingering uncertainty surrounding the economic outlook and the potential for further inflationary pressures. Investors are closely watching the upcoming PPI data, as it is expected to offer further clues on the Federal Reserve's interest rate outlook and the broader economic trajectory.