Bitcoin erases losses, jumps back above $30,000 despite hot U.S. inflation report

The price of bitcoin turned positive on Wednesday after falling below the $30,000 for the second time this week.

Bitcoin was last up by less than 1% at $31,520.63, according to Coin Metrics. Earlier in the day it dropped as low as $29,026.66, its weakest point since December 2020.

Cryptocurrencies had fallen with stocks earlier Wednesday after the Bureau of Labor Statistics reported consumer prices for the month of April jumped 8.3%, which was slightly higher than expected by economists polled by Dow Jones.

That spooked investors, leading them to exit risk assets including crypto. Cryptocurrencies remain highly correlated with the S&P 500 and, more recently, the Nasdaq Composite.

"The crypto market has been under pressure for some time now," said Michael Rinko, venture associate at AscendEx. "The Fed keeps hiking, so equities keep going down and crypto's been going down along with it. Generally that's created a lot of fear in the market."

Ether stayed negative. It initially fell 8% before paring losses. It was last down less than 1% at $2,331.69.

This is the second time this week bitcoin has fallen into the $29,000 range. Analysts have called $30,000 a key level for the largest cryptocurrency by market cap, and said it could fall even further if it can't hold there.

This time last week bitcoin touched a recent high of $40,000 but quickly reversed the next day and has been steadily hitting new lows since.