The Consumer Price Index in the U.S. showed a slight increase in February. Traditional markets responded with increased volatility, but BTC quotations rose to the highest levels since June 2022.
The U.S. Department of Labor released data on the Consumer Price Index (CPI) for February 2023. The report showed that inflation in the United States rose by 0.4%. The 12-month inflation rate was 6%, the lowest since September 2021. However, the Fed had planned to lower the rate to 2%.
Analysts at CNBC report a high probability of further increases in the base interest rate and note that traditional markets have reacted to the latest CPI data with higher volatility. Bitcoin reacted with an increase on the release of inflation data. The price of BTC rose momentarily to $26,514, according to CoinMarketCap.
The first cryptocurrency was also affected by the stabilization of the banking sector, which showed a significant drop the day before. Thus, First Republic Bank (FRC), which suffered the most on Tuesday, March 14, returned 54% of the value, Western Alliance Bancorporation (WAL) — 46%, KeyCorp (KEY) — 15%, and so on. This impacted the quotations of high-risk assets, including cryptocurrencies.
After setting local highs, BTC dropped to $25,000, but experts predict further growth on the basis of derivatives market data. So, there’s a mass closure of short positions by professional traders against the background of the preservation of open long positions with margin funds. The Bitcoin Fear and Greed Index rose from 33 to 56 points in two days, reflecting the optimistic mood of market participants.
However, it’s too early to talk about the start of a new “rally” of BTC because the first cryptocurrency is affected by many limiting factors, one of which is the U.S. government’s plans to impose an additional tax on miners in 2024.
