Sam Cooling
Bitcoin (BTC) has rallied past the $26,000 mark, hitting levels not seen since last summer, as investors consider the latest inflation data.
BTC surged over 7.5% to $26,550, with chart analysts eyeing $25,200 as a crucial level to watch. Ether also gained 3.7% to reach $1,747.11.
#Bitcoin just hit the highest price in 275 days! pic.twitter.com/JBxsapufeN
— Bitcoin Archive (@BTC_Archive) March 14, 2023
Since Friday, BTC’s price has risen approximately 28.5%, when regulators shut down Silicon Valley Bank.
Meanwhile, Ether has gained 20% since then and 45% year-to-date.
The surge in prices coincides with the latest consumer price index reading, which showed a 0.4% increase in February from January, in line with economists’ expectations polled by Dow Jones.
The core CPI, which removes volatile food and energy prices, showed a monthly increase slightly above economists’ expectations and a year-over-year change in line with expectations.
The US Consumer Price Index (CPI) rose 0.4% in February, a slight dip from January’s 0.5%.
On an annual basis, the CPI rose 6.0% in February compared to January’s 6.4%. Excluding food and energy components, the CPI increased by 0.5% after rising 0.4% in January.
The core CPI gained 5.5% in the 12 months through February after advancing 5.6% in January.
US CPI has moved down from a peak of 9.1% last June to 6.0% in February.
What's driving that decline? Lower rates of inflation in New/Used Cars, Gasoline, Medical Care, Apparel, Food at Home, Electricity, Gas Utilities, and Fuel Oil. pic.twitter.com/ijoEDkwFKO
— Charlie Bilello (@charliebilello) March 14, 2023
Despite the dip, traders are still anticipating a 25-basis-point rate hike at the Federal Reserve’s meeting in March.
CPI Figures Breathe Life Back Into Markets
The recent collapse of SVB Financial Group and peer Signature Bank, along with fears of risks to other banks from sharp interest rate hikes by the Fed, has hammered stocks over the past few days.
Investors hope that the threat of a financial crisis will force the US central bank to ease up on monetary tightening.
The S&P 500 banking index rose 3.9% after suffering its biggest one-day percentage drop since June 2020 in the previous session.
Regional bank stocks also rebounded with the KBW Regional Banking index up 7.7%.
Shares of ride-hailing companies Uber Technologies and Lyft rose 7% and 8.6% respectively after a California state court revived a ballot measure allowing app-based services to treat drivers as independent contractors rather than employees.
Cryptocurrency prices have recovered significantly since late last week, with market sentiment reversing after US regulators backstopped depositors of Silicon Valley Bank and Signature Bank.
This led some investors to speculate that the Fed would be less aggressive in raising interest rates.
While Bitcoin has not been trading as closely with equities as it did for much of 2022, its price is still mainly driven by macro data.
Some analysts expect to see a bigger return to that correlation, despite idiosyncratic events driving much of the action in 2023.
However, On-Chain data has proven to be increasingly accurate in predicting recent price moves .
With the net exchange position change signalling an end to a 25-day sell-off period since Sunday.
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This article was written for Business 2 Community by Sam Cooling.
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