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Bitcoin shoots up 12% and exceeds $24,500 awaiting key data from the US CPI

Bitcoin shoots up 12% and exceeds $24,500 awaiting key data from the US CPI

In this context, the 10 main cryptocurrencies advance led by Bitcoin up to 12%, managing to reach above US$24,500. Meanwhile Ethereum adds 6% and advances to US$1,680.

While the equity markets are bleeding to death due to the crisis unleashed by the bankruptcy of Silicon Valley Bank (SVB), cryptocurrencies did not have a downward movement. According to some experts, this is because the fall of SVB will completely change the plans of the Federal Reserve (Fed) as far as monetary policy is concerned. So much so that prestigious firms such as Goldman Sachs forecast that the central bank will not raise rates in March, while Nomura warns that the FOMC could decide on a 25 basis point cut next week.

“In theory, the worst of the crisis should be behind us, since the US government guaranteed all depositors of the banks that went under last week. But the crisis will surely make the Fed think twice about what to do next week,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

This expert emphasizes that the prices of the futures of the Federal Reserve funds suggest that there is something more than 70% probability of a rise of 25 basis points next month, and just under 30% chance that there will be no rate hike. “This is a big change from last week,” she says.

What could end up tipping the balance to one side or the other? The CPI reading for February in the United States. Both headline and core inflation are expected to have softened in February, but there is some caution in the market after last month’s disappointment. “The base effect, where we’ll finally start comparing war months to war months, won’t come into play until March, since Russia invaded the Ukraine at the end of February last year,” says Ozkardeskaya, who forecasts a “challenging read” for the Fed.

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“An online CPI data, or ideally softer than expected, could fuel the expectation of a “no hike” from the Fed, while stronger-than-expected CPI data may not fuel expectations of a Fed rate hike, as many investors will urge the Fed to stop raising rates and be patient about the impact on the inflation that could come with the delay”, he concluded.

Crypto assets reacted negatively to the latest CPI reading, although it wasn’t long before the crisis unleashed by SVB has turned the entire market upside down. According to Michael van de Pöppe, CEO and founder of investment firm Eightthe ideal for the price of the leading cryptocurrency would be to see some period of consolidation before the inflation data is published. Likewise, he points out that any lower data than expected by the consensus will be “positive for bitcoin, since we will not see rate hikes from Powell.”

Source: Ambito

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