The cryptocurrency continued to show an unexpected level of resilience on Tuesday, with Bitcoin (BTC) bears once again attempting to push prices lower, supported by heavy inflows into the Spot BTC ETF to keep demand high. was firmly rejected by the bulls.
A better-than-expected consumer price index reading fell early in the market's opening, causing a temporary slump in asset prices, but investors quickly ignored the report and concerns about interest rates, sending stocks higher.
The S&P, Dow, and Nasdaq ended the day up 1.12%, 0.61%, and 1.54%, respectively, although the major indexes are still below their recent highs.
According to data provided by TradingView, the CPI rose above $72,000 early Tuesday, leading to increased volatility in Bitcoin, after the top cryptocurrency briefly reached a new high of $73,040 on Coinbase. It shows that it has fallen to the day's low of $68,615. afternoon.
BTC/USD Charts by TradingView
Buyers were quick to jump on the 6% intraday price move, and their efforts have seen Bitcoin return to above $70,830 at the time of writing, down 1.9% on the 24-hour chart.
Bitcoin is seen as a hedge against inflation
Traditionally, higher-than-expected CPI numbers and unexpected strength in the job market have hurt crypto prices, but the strength of Bitcoin and continued inflows into spot BTC ETFs have created new momentum in the crypto market. Combined with level stability, this bodes well. What's the long-term outlook for this bullish cycle?
“In the past, CPI data and interest rate cuts have played a more important role in crypto price movements, but the question is whether expectations for interest rate cuts are influencing the recent bull market rally. 'I don't think so.' Now that's totally fine,'' Greg Magaddini, director of derivatives, said in a note shared with Kitco Crypto.
“Cryptocurrencies are actually moving based on their own factors,” he added. “The interest rate discount rate doesn’t really matter. The current Bitcoin futures base is 25% per annum for leveraged longs. This means that investors are willing to pay a significant premium for leveraged long positions. So traders who are into Bitcoin right now don't really care whether the risk-free rate is 5% or 5.25%.
This outlook was reiterated by Aurélie Bartel, principal research analyst at Nansen.ai, who told Kito Crypto that even without a Fed rate cut, inflation would be higher than expected due to factors such as institutional interest rates. said that there should be no brake on Bitcoin's rise. Demand will continue to push the best cryptocurrencies to new highs.
“In terms of the short-term impact of today's US CPI announcement, the crypto bull run is far from over and we do not expect it to have a significant impact on prices in the coming weeks,” Bartel said. . “There is too much bullish momentum for cryptocurrencies (see price and news flow, latest announcement by BlackRock allocating its BTC ETF to two asset management funds).
“What will likely happen is that the expected Fed rate cuts will be priced in again. Currently, future markets are pricing in four rate cuts through December 2024. This is two to three rate cuts. (The FOMC meeting's forecast, updated this month, calls for a median of two to three rate cuts in fiscal 2024), he said. “This repricing has happened over the past few months without questioning the bull market, so we do not expect a significant decline in cryptocurrencies (consolidation and significant decline).”
“Interestingly, since the CPI announcement, gold has only fallen by 1% while US two-year yields have increased by 5bps,” she added.
Bill Zielke, BitPay's chief revenue and chief marketing officer, said continued high inflation makes Bitcoin a good choice for investors who want their assets to match or exceed rising costs of living. He said it is becoming more attractive.
“Investors looking for growth and diversification are adding digital assets to their holdings as inflation concerns continue at the macroeconomic level and the Federal Reserve is extra cautious about cutting interest rates,” he said. “With the recent approval, launch, and development of several spot Bitcoin ETFs, investors are once again taking crypto seriously thanks to institutional participation in this asset class.”
“Bitcoin in particular has emerged as a hedge against inflation, and rising economic uncertainty is prompting investors to seek protection in their digital assets,” Zielke said. “Cryptocurrencies will continue to re-enter the conversation as markets seek long-term stability.”
“Another thing to keep an eye on is the halving event scheduled for April,” he added. “The Bitcoin halving will further limit the supply of newly minted Bitcoins, increasing the scarcity of the digital currency and driving its price historically higher.”
“The soaring price of BTC is not only attracting the attention of investors; long-time holders are also looking for ways to profit from the gains,” he concluded. “Interest in crypto spending is up over 25%, showing the impact of the current bull market.”
“The investment environment is witnessing a major shift globally towards cryptocurrencies, and in particular Bitcoin, as a viable asset class,” said Matt Barensweg, Managing Director and Head of the Go Network at BitGo. states. “The arrival of nine new Bitcoin ETFs is a major shift in portfolio construction, as institutional investors and advisors are almost forced to consider the impact of adding Bitcoin to a standard 60/40 portfolio.” It suggests.”
“While we recognize the potential setbacks, the broader trajectory points to a generational shift in investment strategies, with a variety of avenues available to access the market, each with its own set of There are different considerations.”
Altcoin market mixed day
It was a mixed day for altcoin trading, with most of the top 200 tokens losing money as traders took profits or fled to the sidelines to wait for CPI-induced volatility to subside. was recorded.
Daily cryptocurrency market performance. Source: Coin360
AMP (AMP) led the gainers, jumping 103%, followed by Vanard Chain (VANRY), up 34.9%, and Injective (INJ), up 21.8%. Monday's biggest gainer, CELO, was today's biggest loser, down 9.1%. Meanwhile, Origin Trail (TRAC) fell 8.1% and Moonbeam (GLMR) fell 6.8%.
Currently, the total market capitalization of virtual currencies is $2.7 trillion, with Bitcoin controlling 52%.
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