Bitcoin fell below $48,500 after figures showed US inflation fell less than expected in January to 3.1%.
The price of bitcoin swung wildly as investors worried about the outlook for interest rates in the United States.
The world’s largest cryptocurrency rose as high as $50,383 in early trading (a level last seen in December 2021), bringing gains over the past three weeks to nearly 30 percent.
But it then fell back below $48,500 after official figures showed U.S. inflation fell less than expected in January, to 3.1 percent.
Bitcoin has rallied strongly this year on hopes that the Federal Reserve, the US central bank, will begin cutting interest rates.
It was boosted last month by the U.S. Securities and Exchange Commission’s decision to approve exchange-traded funds designed to track their price.
Its value has more than tripled since falling below $16,000 in November 2022, but it is still some way off the 2021 high of around $70,000.
Craig Erlam of trading firm Oanda said: “Just as Bitcoin managed to surpass $50,000 for the first time since 2021, a nasty US inflation report pulled the rug out from under it.
While it is detrimental in the short term, I don’t think it will dampen the mood in the crypto space too much.”