US Inflation Indicators, Crypto Market Trends

Despite mixed US employment data, optimism persists for the cryptocurrency market’s bullish trend, highlighting its resilience and growth potential.

The United States is scheduled to release noteworthy inflation indicators this week, including the unadjusted annual rate of the core CPI for February, the yearly rate of the PPI for February, expectations for first-year inflation rates, and additional data.

The CME estimates that the probability of the FOMC leaving interest rates unchanged on March 20 is an astounding 97%.

At this juncture, the broader cryptocurrency market pauses following a robust rally last week. Bitcoin and Ethereum, the leading cryptocurrencies, have experienced a retracement since reaching all-time highs of $70,000 and $4,000, respectively.

A comparable decline is observable in various alternative cryptocurrencies that experienced a substantial upsurge last week.

In this week’s economic reports, the US CPI (consumer price index) data released on Tuesday will be the focal point. The core price index may increase by 0.3% month-over-month and 3.7% annually in February, according to projections; this would be the smallest annual increase since April 2021.

A subsequent deceleration in United States prices would bolster the dominant discourse of deflation, notwithstanding a decrease in the anticipated quantity of rate reductions by the Federal Reserve for the year.

The swap pricing suggests that three reductions are expected in 2024, a decrease from the initial estimate of six reductions.

This outlook remained essentially unchanged by last week’s US employment data. Although new job additions surpassed initial projections, the unemployment rate has surged to its highest level in two years.

This contradictory indication indicates a progressive deceleration of the labor market, which, at present, corresponds with anticipations of a smooth recovery in the United States economy.

Chris Larkin, a Morgan Stanley strategist at E*Trade, stated, “The employment report did not provide definitive evidence that the Federal Reserve should abandon its plan to reduce interest rates, but it also did not indicate an absolute ‘all-clear.'”

Cryptocurrency Market Analysis amid US Economic Data

Bitcoin and Ethereum, per the findings of on-chain data provider Santiment, exhibited substantial increases over the previous week, surpassing the returns observed in the S&P 500.

Bitcoin experienced significant growth of 10.0%, whereas Ethereum surged by 14.7%. Compared, the S&P 500 index returned a comparatively modest 0.5%.

Throughout history, cryptocurrency markets have demonstrated consistent bullish trends with limited correlation to conventional equity markets. This trend is being closely monitored by traders, who are optimistic regarding its continuation.

The notable discrepancy in performance between cryptocurrencies and traditional markets highlights the distinct forces that impact the valuation of digital assets. This generates optimism regarding the sustained resilience and expansion of the market.