Bitcoin (BTC) hit $30,000 on April 12 as US macroeconomic data added to jitters.
Analyst warns markets to “discount the importance” of the CPI
Data from Cointelegraph Markets Pro and TradingView showed the BTC/USD pair hovering around the psychologically significant level following overnight lows of $29.875 on Bitstamp.
The March Consumer Price Index (CPI) will be released at 2:30 p.m. ET, followed by minutes from the Federal Reserve’s Federal Open Market Committee (FOMC) meeting last month, in which Political leaders confirmed a rise in interest rates of 0.25%.
“Today is US CPI day and for the first time in a long time it seems the market is discounting the importance of this event…”, wrote the analysis account Tedtalksmacro in part of his comment on Twitter.
“Trader positioning going into today is nowhere near as conservative/low risk as we would normally see.”
With a forecast of 5.2% year-on-year, compared to 6% a month ago, The CPI paints a mixed picture: Federal Reserve policy remains aggressive, while pressure from the recent banking crisis has markets unsure about the feasibility of further monetary policy tightening.
Data from CME Group’s FedWatch Tool shows expectations that rate hikes will continue into May, but potentially pause afterward.
“We note that the Fed is still heavily data dependent and has warned not to take its foot off the gas prematurely,” trading firm QCP Capital wrote in a market update published that day.
“Markets are priced 75% for a 25bp rise in May. Therefore, this number has great importance in any way. A lower than expected print will likely kick off the rally and lead to a rally in risk assets.”
QCP went on to say that the release of the FOMC minutes may have an equally influential impact on crypto assets thanks to the divergence of the Fed’s stance versus market sentiment.
“Investors will be closely examining the reasons for the Fed’s downgrade and what they will be watching in terms of the banking sector, liquidity and overall market performance. While reliance on inflation data will be a critical factor, investors Comments on bank stability will carry weight, particularly how many rate hikes the Fed considers the current credit tightening equals.”indicates the update.
“Lately, cryptocurrencies as an asset class have not been a good reflection of macro markets. To that end, cryptocurrencies have their own event risk following the release of the FOMC minutes.”
Ether Gives Up BTC Gains
Meanwhile, ahead of the release of the Ethereum (ETH) Shanghai mainnet upgrade, altcoins had a rough 24 hours, with many of the top ten cryptocurrencies by market cap shedding 3-4%.
In doing so, altcoins reversed gains, accompanying Bitcoin’s push past the $30,000 mark, noted Michaël van de Poppe, founder and CEO of trading firm Eight.
Tough market circumstances for #altcoins as most of them are correcting the entire move. #Bitcoin still at $29,900 with CPI coming up today.
CPI coming in hotter as expected -> rough correction seems likely unless Core / MoM is going to be good.
—Michaël van de Poppe (@CryptoMichNL) April 12, 2023
Difficult market circumstances for altcoins as most of them are correcting the whole move. Bitcoin still at $29,900 with CPI coming in today.
IPC is hotter than expected -> a rough correction seems likely unless Core/MoM is going to be good.
Ether’s strength against Bitcoin fell to 10-month lows on the day, with the ETH/BTC pair trading at 0.062.
“Unsurprisingly, the strength of the ETH/BTC pair was short-lived”, reacted the popular trader Credible Crypto.
He added that the performance does not “speak so much of weakness in ETH itself, but much more strength in BTC as we continue our parabolic drive towards new all-time highs.”
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