Bitcoin has surged to a new nine-month high of $26,373 on March 14, driven by the United States Consumer Price Index (CPI) data that showed mixed inflation signals.
The CPI reported an inflation increase of 6% year-on-year while month-on-month rose 0.4%. Items less food and energy increased by 0.5%.
US #inflation data more or less in line. Feb Overall CPI +6% YoY from 6.4% in Jan, Core CPI 5.5% in Feb down from 5.6& YoY in Jan. pic.twitter.com/k8rzsmdqVA
— Holger Zschaepitz (@Schuldensuehner) March 14, 2023
After the release of the CPI data, Venturefounder, a contributing analyst at on-chain analytics platform CryptoQuant, suggested that the market is now anticipating a “pivot” on hikes, which would benefit risk assets more broadly.
He tweeted, “The market: oh yes big victory on fighting inflation! No more rate hikes, and Fed is gonna cut rate by 50 BPS before EoY 2023.”
https://twitter.com/venturefounder/status/1635621473476804609
However, Game of Trades, a trading resource, argued that the CPI was still not low enough for the Fed to aggressively change its stance and take actions similar to those taken after the COVID-19 crash in March 2020.
Consensus gets it spot on as CPI comes in at 6%
But it's not low enough to give the Fed room to aggressively step in during the ongoing crisis, as it did during C19
— Game of Trades (@GameofTrades_) March 14, 2023
The banking crisis puts inflation concerns on back burner
The data allowed the Federal Reserve to avoid being trapped between stickier inflation and avoiding interest rate hikes amid an ongoing banking crisis.
However, following the collapse of Silicon Valley Bank on Friday and the shutdown of Signature Bank over the weekend, traders quickly pivoted and are now pricing in only the slimmest chance of any rate hike in March and rate cuts by mid-summer.
Bitcoin hits new 2023 high with best performance since June 2022
Despite CPI being notorious for sparking unpredictable BTC price moves, the cryptocurrency has extended its advance, reaching $26,373, marking an 18% gain over the past 24 hours. The local highs of $26,150 nonetheless marked a new record for 2023 and its best performance since June last year.
Prior to the CPI release, significant sell-side liquidity was parked at $25,000 and beyond, which was the main target of bulls on low timeframes.
BTC/USD further took out the key 200-period moving average, acting as resistance on weekly timeframes.
Nevertheless, the surge in BTC price has become secondary to inflation concerns, as investors, the government, and the Federal Reserve deal with the possible systemic implications of multiple bank failures.
