Risk assets like Bitcoin (BTC) are performing well, a Truflation analyst said, after the cryptocurrency suffered moderate losses on Tuesday after the U.S. inflation report came in hotter than expected, dashing hopes of a Fed rate cut.
The U.S. Consumer Price Index report for January showed that health and utility prices rose due to tight labor markets, while food, alcoholic beverages, clothing and household durable goods became cheaper as consumers returned to their normal post-holiday purchasing patterns (truflation). were wrote in a recent report.
Bitcoin fell from $50,000 to around $48,800 after U.S. consumer price index numbers led traders to push back the timing of the first rate cut to July. However, the decline was short-lived and prices settled around $49,500 at the start of the Asian business day, according to data from CoinDesk Indices. The CoinDesk 20 Index, which measures the performance of the top digital assets, has fallen 0.73% in the last 24 hours.
“While we saw a slight decline in Bitcoin on the news, risk assets in general appear to be behaving as if a rate cut in March is still on the table, even if the vast majority of market participants do not expect it,” Oliver said Rust, product manager at independent economic data provider Truflation, in an email interview.
“Until we see economic data weakening, rate cuts are likely off the table until May or June,” Rust continued. “But perhaps markets have simply accepted the fact that higher interest rates are here to stay for the longer term and have learned to live with this new reality now.”
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