Inflation has decreased, which is a good sign. Investors’ hopes for a less harsh US central bank remained intact. Bitcoin embraced the more positive attitude and continued its gallop upward for much of Tuesday, breaking beyond $26,000 for the first time since last summer before falling more than $1,000.
The most valuable cryptocurrency in terms of market capitalization was currently trading at $24,936, up nearly 2% in the last 24 hours. BTC’s halt came after two days of double-digit gains connected to Binance stablecoin conversions, investors’ satisfaction that the banking sector would not collapse, and the Federal Reserve’s decision to reverse its steady diet of aggressive interest rate hikes.
On Tuesday, a modest drop in the Consumer Price Index (CPI) from 6.4% in January to 6% last month appeared to provide the Fed with new justification for monetary dovishness. Even a month-over-month increase in core inflation, which excludes volatile food and energy expenses, was offset by a modest yearly reduction.
“Bitcoin is skyrocketing because the liquidity situation appears to be swiftly shifting,” Joe Ziolkowski, CEO and co-founder of digital asset insurer Relm Insurance, told CoinDesk in an email. “The CPI numbers released today show that inflation is slowing.
Ziolkowski highlighted that the latest banking crisis including the collapse of Signature, Silvergate and Silicon Valley institutions had “inspired a federal response, infusing a lot of money in the economy, and enhanced Bitcoin’s use case as a decentralized alternative to our existing banking system.” “Investors certainly have faith in this,” he added.
Ether was trading just around $1,700, roughly where it was on Monday at the same time. This week, the second largest cryptocurrency has roughly mirrored BTC’s ascent. Other big cryptocurrencies spent the majority of Tuesday in the green before flattening. APT, the layer 1 blockchain Aptos token, has lately increased by more than 14%. CRO, the native cryptocurrency of crypto exchange Crypto.com, increased by roughly 6%. The CoinDesk Market Index, which measures the overall performance of the cryptocurrency market, increased by 2.4%.
The CPI figure also boosted US share markets, with the tech-heavy Nasdaq and S&P 500 rising 2.1% and 1.6%, respectively. But, as CoinDesk analyst Glenn Williams pointed out in his Tuesday piece, the Fed’s next steps at its March 22 meeting remain unpredictable.
According to Reim’s Ziolkowski, “pressure is now increasing on the Federal Reserve to limit the pace of rate hikes, and potentially even cease hiking entirely, given that the quick rate increases over the last year have plainly imposed significant stress on the system.” “The setting for a long-term rally in Bitcoin and other digital assets appears to be in play,” he continued.
