After the US inflation data was known, the cryptocurrencies rise to 16.7%. The data is surprising after the financial crisis that the US experienced and how digital currencies managed to avoid turbulence. Besides, the forecast that the Fed will moderate ratesacts as a buffer and is encouraged by the inflation data that showed a sharp slowdown.
Top 10 cryptocurrencies advance led by Bitcoin which rises to 16.7% and is located above US$26,000. While ethereum adds 9.3% and advances above US$1,750.
They are followed in growth by Polygon (9.9%), Dogecoin (9.3%) and Cardano (7.7%).
US consumer prices rose 6% year-on-year in Februaryin an environment of sharply rising home rental prices, but economists are divided on whether the rise will be enough to push the Federal Reserve to raise interest rates again after the bankruptcy of two regional banks.
The Consumer Price Index (CPI) rose 0.4% last month after accelerating 0.5% in January, the Labor Department reported on Tuesday, cutting the year-on-year rise in the CPI to 6% in February, the smallest annual rise since September 2021.
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.
“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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