Investing.com– Bitcoin rose on Wednesday, extending an overnight recovery as risk sentiment improved amid rising bets on a deeper U.S. interest rate cut and attention turned to upcoming inflation data.

The stock was up 3% at $61,024.7 by 01:19 ET (05:19 GMT), after the company recouped all of the bulky losses suffered during last week’s market crash.

However, further gains for Bitcoin remained narrow as institutional inflows into the token remained narrow and uncertainty over the regulatory outlook for cryptocurrencies in the US also played a role.

Bitcoin extends bounce as frail PPI data lifts sentiment

The gains in bitcoin and the broader cryptocurrency market were mainly due to weaker-than-expected inflation data released on Tuesday.

The reading raised hopes that data due out Wednesday will ease as expected. Lower inflation gives the Federal Reserve more room to start cutting interest rates.

Bets on a 50 basis point rate cut rose following Tuesday’s PPI reading, although investors were still pricing in a 25 basis point cut.

Lower interest rates are beneficial for the cryptocurrency market because they escalate liquidity that can be directed into speculative markets such as cryptocurrencies.

But despite this week’s rebound, Bitcoin still remained close to the trading range seen for most of this year as it struggled to reach modern highs following a rally in March. The token has largely lagged the rally in stock markets in recent sessions.

The frail performance in cryptocurrencies came amid renewed regulatory uncertainty in the U.S., as polls showed a tight presidential race between Donald Trump and Kamala Harris. Trump has maintained a pro-crypto stance, while Harris has not addressed the industry.

Mt Gox distributions are ongoing

Bitcoin’s recovery was also hampered by reports that a wallet that received $2 billion in bitcoin from shuttered cryptocurrency exchange Mt Gox initiated a test transaction on Tuesday.

It is unclear how much Bitcoin the exchange holds. However, the exchange is expected to escalate the selling pressure on Bitcoin by returning tokens stolen from customers during a 2014 hack.

Cryptocurrency Price Today: Altcoin Gains Slowly

Broader cryptocurrency prices rose, tracking Bitcoin’s strength. But gains were narrow across most major altcoins.

The world’s second-largest token rose 2.6% to $2,720.45, while the token’s value rose 1.8% and 0.6%, respectively. It fell 1%.

Among meme tokens, the escalate was 0.4%.