Bitcoin And Crypto Respond Bullish To February’s CPI At 6.0%
14 Marzo 2023 - 07:10AM
NEWSBTC
After the Bitcoin made a massive rally of over 20% in the wake of
the banking crisis in the United States, all eyes were on the new
inflation data in the US today. The release of the Consumer Price
Index (CPI) for February came from the US Bureau of Labor
Statistics (BLS) at 8:30 EST. And these are the numbers: The annual
inflation rate was 6.4% in January and was estimated at 6.0% for
February. The February Consumer Price Index released today showed
inflation at 6.0%, in line with expectations. Annual core inflation
was forecasted at 5.5%, down from 5.6% in January. Today’s release
was 5.5%. On a monthly basis, the U.S. consumer price index was
0.4% in February. The forecast was for 0.4%, down from 0.5% last
time. Core inflation on a monthly basis shows a similar picture. It
was reported today at 0.5% for February, with both the forecast for
February and actual for January standing at 0.4%. Thus, the
inflation data comes out almost exactly as expected, only the core
inflation MoM is slightly higher than expected. CPI: 6.0% –
Forecast 6.0% Core CPI: 5.5% – Forecast 5.5% Which means, entirely
as expected. — Michaël van de Poppe (@CryptoMichNL) March 14, 2023
What Does This Mean For Bitcoin And Crypto? The latest inflation
data from the US is bullish, as it could give the Fed room to pause
rates or even cut them. And the Bitcoin price immediately reacted
accordingly. At press time, BTC broke through the extremely
important resistance at $25,200 and hit $26,278 on Binance at one
point. Related Reading: Bitcoin Price Poised For Heavy Volatility,
Bulls Winning? One thing to keep in mind is that the Dollar Index
(DXY) went into a downward spiral after the recent mixed US jobs
report and the biggest banking crisis since the great financial
crisis in 2008. Due to the banking system’s intrinsic problem with
the U.S. government bonds and the new “Bank Term Funding Program”
of the U.S. Federal Reserve (Fed), the dovish expectations have
risen massively. By means of the new program, the Fed is rescuing
all banks. They can pledge their currently loss-making bonds (but
also MBS) to the Fed at the purchase price at the time instead of
the current market value and receive cash in return. For many
market participants, this means that the Fed has once again turned
on the money printer while the DXY is poised for further downside.
Related Reading: Signature Bank’s Closure Is Political And A Strong
Anti-Crypto Message, Ex-Congressman Ultimately, the Fed may has no
other choice than back-paddling on their interest rate hikes to
avoid eroding confidence in the US banking system. The new
inflation figures should give the Fed more leeway to point to a
deflationary environment and lower the rate hike pace or even pause
in the midst of the banking crisis without losing its credibility.
For Bitcoin and crypto, the CPI print couldn’t have been much
better. There is only one downside, which the market seems to be
ignoring at the moment. Liz Young, head of investment strategy at
SoFi writes: Feb headline CPI in-line at 0.4% (m/m) & 6.0%
(y/y), core a bit higher at 0.5% m/m vs 0.4% est. Somewhat worrying
trend is that core services ex-housing (aka “supercore”) continued
to move up m/m. That’s what the Fed is watching, futures say a 25bp
hike has a 76% chance. At press time, the Bitcoin price smashed
through the key resistance at $25,200 and stood at $26,219.
Featured image from petre_barlea / Pixabay, Chart from
TradingView.com
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