Stocks recover, cryptocurrencies slip sideways on CPI data
Bitcoin, after posting another record-high of just under $73,000 Monday, lost 0.7% Tuesday
Vit-Mar/Shutterstock modified by Blockworks
Bitcoin and ether faltered slightly Tuesday afternoon in New York while stocks rebounded after an initial slip on disappointing annual inflation numbers.
The S&P 500 was trading about 1% higher at time of publication while the tech-heavy Nasdaq Composite gained 1.3%.
Bitcoin (BTC), after posting another record-high of just under $73,000 Monday, lost 0.7% Tuesday. Ether (ETH) was also trading lower, dropping 1% at time of publication.
Read more: Cheatsheet: Ethereum on track to burn $10B ETH over next year
The market moves come as Tuesday’s Consumer Price Index (CPI) print showed inflation rose 0.4% in February and 3.2% from a year ago, according to the Bureau of Labor Statistics. Analysts had expected a 3.1% year-over-year increase, but the monthly figure came in as predicted.
Despite coming in not too far off expectations, Tuesday’s report could lead markets to expect a delayed timeline for rate cuts from the Federal Reserve, which will announce its policy decision next week.
“There’s no way the Fed can justify a cut if inflation is accelerating, even if it’s only a small move,” Noelle Acheson, author of the Crypto is Macro Now newsletter said.
February’s CPI report was highly anticipated, analysts say, as the January read — which showed a 3.1% annual increase — is skewed by annual contracts.
“In terms of the short-term impact of today’s US CPI release, we do not expect it to end the crypto bull market yet, nor to impact prices significantly in the coming weeks,” Aurelie Barthere, principal research analyst at Nansen, said. “What will probably happen is a repricing of expected Fed rate cuts: Right now future markets have four rate cuts priced by December 2024, this should be shaved to 2-3 rate cuts.”
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