Bitcoin Rallies 4% on Wall Street After Softer‑Than‑Expected US CPI, Reviving March Rate‑Cut Speculation
The leading digital asset climbed to a fresh high near $69,200 on Friday, as the January consumer‑price index came in below market forecasts and revived expectations of a Federal Reserve rate cut at the March FOMC meeting.
Market backdrop
- US inflation surprise: The Bureau of Labor Statistics reported a 2.4 % year‑over‑year increase in the headline CPI for January, missing the 2.5 % consensus. Core CPI, which excludes food and energy, exactly matched the 2.5 % estimate.
- Fed‑watch implications: The data pushed the probability of a 0.25 % rate reduction in March back up to roughly 9 % according to CME Group’s FedWatch tool, after having slipped to single‑digit levels in recent weeks.
- Broader macro response: Gold attempted to retake the $5,000/oz threshold, while the U.S. dollar index (DXY) recovered from an early dip to 96.8. U.S. equities, however, showed only modest declines, lagging behind the crypto rally.
Bitcoin’s price move
Trading platforms showed Bitcoin gaining as much as 4 % intraday, with the BTC/USD pair on Bitstamp touching $69,190. The rally represented a notable bounce from the previous week’s consolidation near $66,000 and moved the market closer to the $68,000‑$69,000 resistance zone—a region that houses the 2021 all‑time high and the 200‑week exponential moving average (EMA).
Technical perspective
- Pattern analysis: Traders observing the one‑hour chart identified a falling‑wedge formation that has been holding as a short‑term support structure. A brief breakout attempt earlier in the session was repelled near the $68,000 level, underscoring the price’s sensitivity to the $68 K‑$69 K band.
- Higher‑low outlook: Crypto analyst Michaël van de Poppe noted that, despite the fragility of the current range, a higher low could materialise if market sentiment improves, especially with the Fed’s policy outlook becoming more dovish.
- Risk considerations: While the price action is bullish, several market participants remain cautious. The next leg of the move will likely depend on whether the Fed’s rate‑cut probability sustains its upward trajectory and whether broader risk assets maintain their recovery.
Commentary from the crypto community
- Inflation context: Andre Dragosch of Bitwise pointed out that alternative inflation metrics, such as Truflation, had already signalled a sub‑1 % CPI trajectory, making the official BLS numbers less of an “unexpected” surprise.
- Rate‑cut sentiment: The Kobeissi Letter highlighted that core CPI is now at its lowest level since March 2021, a data point that traditionally correlates with heightened expectations for monetary easing.
Key takeaways
| Takeaway | Implication |
|---|---|
| Soft CPI lifts Fed‑cut odds | Market pricing of a March 0.25 % rate cut has risen to just under 10 %, rekindling optimism for liquidity‑friendly policy. |
| Bitcoin breaches $69 K | The rally brings BTC close to a critical technical barrier that could trigger a breakout if sustained. |
| Macro assets diverge | Gold and the dollar show mixed reactions, while equities remain subdued, highlighting crypto’s relative outperformance. |
| Cautious optimism persists | Analysts stress that the current price range is still fragile; further upside may require confirmation from both inflation data and Fed signals. |
Bottom line: A softer‑than‑expected CPI report has reignited speculation that the Federal Reserve may commence interest‑rate easing in March, providing fresh impetus for Bitcoin’s price. While the cryptocurrency has surged 4 % and approached a pivotal resistance zone, market participants remain watchful, weighing technical signals against evolving macroeconomic narratives.
Source: https://cointelegraph.com/news/bitcoin-passes-68k-on-slower-us-cpi-print-but-fed-rate-cut-odds-stay-low?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
