Facebook iconLinkedin iconTwitter icon
Bitcoin regained a foothold above $22,000 on Tuesday. (CoinDesk)
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.Secure Your SeatFacebook iconLinkedin iconTwitter icon
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.Secure Your Seat
Bitcoin regained a foothold comfortably above $22,000, despite tepid January U.S. consumer price index (CPI) data.
The largest cryptocurrency by market capitalization was recently trading over $22,200, a more than 3% gain during the past 24 hours. BTC had been lingering below $22,000 for the previous five days amid growing investor concerns about stablecoin regulation and U.S. central bank inflation-fighting measures.
January’s CPI rose 0.5% versus 0.1% a month earlier, in line with economist forecasts. But on a year-over-year basis inflation ran hotter than hoped, arriving at 6.4% pace versus 6.5% in December and against predictions for 6.2%. Year-over-year core CPI – which strips away more volatile food and energy costs – was faster than forecast at 5.6% versus 5.5% expected and down from 5.7% a month earlier.
The data suggested that the Federal Reserve would remain hawkish with more interest rate hikes in the offing at upcoming Federal Open Market Committee (FOMC) meetings. The CME FedWatch tool currently shows that around 90% of traders see the FOMC raising rates by 25 basis points in March.
Investor reaction fluctuated significantly in the immediate aftermath of the CPI release with bitcoin (BTC) initially dropping on the news and quickly surging by $700 to trade as high as $22,300 before retreating slightly to its current level.
“The market might be pricing in a little more Fed tightening but that isn’t weighing that much on cryptos today,” Edward Moya, senior market analyst for foreign exchange market maker Oanda, wrote in a Tuesday note. “Regulation and contagion risks have pressured Bitcoin this month, so the downward move was potentially exhausted.”
Ether (ETH), the second-largest cryptocurrency in market value, surged nearly 5% from Monday, same time, to trade above $1,550, regaining losses from recent days. The CoinDesk Market Index, which measures the overall crypto market performance, was recently up 3.7% for the day.
Equities markets were mixed, with the S&P 500 index recently rising 0.1%. The Dow Jones Industrial Average (DJIA) was down 0.2%, while the tech-heavy Nasdaq Composite was up 0.6%.
Joe DiPasquale, CEO of crypto fund manager BitBull Capital, told CoinDesk that he wouldn’t be surprised to see post-CPI-release gains dissipate by the end of this week. DiPasquale highlighted that crypto prices have typically risen after past CPI releases in the past “only to fall in the days after.” He said he will be looking for BTC and ETH to test $20,000 and $1,250, respectively.
Michael Safai, managing partner at quantitative trading firm Dexterity Capital, noted in an emailed comment that regulation now trumps inflation concerns in crypto markets.
“It could very well be that inflation data and Fed meetings won’t have the same push-pull effect on crypto prices that they did in 2022, because regulation is fast becoming the bigger influence on sentiment in crypto.”
Sheraz Ahmed, managing partner at STORM Partners, told CoinDesk that BTC’s recent drop and rebound Tuesday were “relatively muted, with only a few hundred dollars on each side.”
“This was one of the calmest CPI days in recent months,” Ahmed said. “The last CPI print was lower, which, in part, induced the January rally; but with the opposite results today, markets may become more unpredictable.”
DISCLOSURE
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.
Trending1
MarketsShort Trades Make up 90% of $200M in Losses as Bitcoin, Ether SurgeFeb 16, 20232
Web3GQ Magazine to Launch Its First NFT Collection Linked to Real-World RewardsFeb 16, 20233
MarketsFirst Mover Asia: Bitcoin Rockets Past $24.7K to Hit 6-Month HighFeb 16, 20234
PolicyBinance Bracing Itself for Fines From US Regulators to Settle ‘Past Conduct’: WSJFeb 16, 2023
