MARKET MOVES by OMKAR GODBOLE

Bitcoin Hits Two-Week High Above $55K Ahead of US Inflation Data

Bitcoin continues to trade higher, shrugging off impending U.S. inflation data that could amplify fears of an early unwinding of monetary stimulus by the Federal Reserve.

The top cryptocurrency by market value reached a two-week high of $55,822 early on Wednesday, after a five-day winning streak that saw prices claw their way back from below $47,000.

Scheduled for release at 08:30 EST today, the U.S. Consumer Price Index (CPI) is expected to show the cost of living in the world’s largest economy rose 0.4% in February from 0.3% in January. In annualized terms, the CPI is forecast to have risen to 1.7% from 1.4% in January.

The data could influence bitcoin’s price, given the cryptocurrency is considered a hedge against inflation and monetary and fiscal policy imprudence. While a bigger-than-expected jump in inflation would strengthen bitcoin’s long-term bullish case, the cryptocurrency’s immediate reaction could be bearish.

That’s because an above-forecast CPI would validate the narrative that the cocktail of monetary and fiscal stimulus and economic rebound is stoking inflation. That could lead to an early tightening of stimulus by the Fed and another leg higher in Treasury yields and the U.S. dollar.

Treasury yields spiked in the last week of February, lifting the dollar and pushing bitcoin and stocks lower, as investors priced in the likelihood of the Fed’s first interest rate hike occurring at the end of 2022 rather than 2024 in the wake of rising inflation expectations and signs of economic recovery.

In other words, the markets were expecting some pickup in inflation two weeks ago. As such, bitcoin and other assets may not see much price action if the growth in the CPI matches estimates.

From a technical analysis standpoint, the cryptocurrency is looking bullish, having cleared a key price hurdle.

Bitcoin daily prices with 5- and 10-day moving averages (Source: TradingView)

Bitcoin has flipped resistance at $52,666 (March 3 high) into support.

The MACD histogram, an indicator used to gauge trend strength and trend changes, has risen back above zero, indicating a bull revival. The 5- and 10-day price averages are again trending north, indicating a bullish setup.

The immediate resistance is seen at $58,332 (record high), followed by the psychological level of $60,000.

Support at $50,000 may come into play if the CPI beats estimates by a big margin, unsettling traditional markets.

At press time, bitcoin is changing hands near $54,790, representing a 1.6% gain on a 24-hour basis. The 10-year yield is seen at 1.56%, having risen by more than 50 basis points to above 1.6% in the past five weeks. Elsewhere, the S&P 500 futures are up 0.30%.

--Omkar Godbole

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Bitcoin Hits Two-Week High Above $55K Ahead of US Inflation Data

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OTHER MARKETS NEWS by DAMANICK DANTES

Inflation Rate, Closely Tracked by Bitcoin Traders, Probably Accelerated in February

When Federal Reserve Chairman Jerome Powell downplayed the threat of rising inflation last week, market participants saw the opposite: The recent rise in 10-year U.S. Treasury-bond yields and so-called breakeven rates – a gauge of inflation expectations – reflects growing enthusiasm over economic growth prospects but also anxiety over the potential for accelerating price increases.

The matter is crucial to bitcoin traders, since the largest cryptocurrency is seen by a growing number of investors as a potential hedge against higher prices after the Fed pumped trillions of dollars of freshly created money into financial markets over the past year, a form of monetary stimulus for the coronavirus-racked economy.

On Wednesday investors will get the latest reading on price pressures when the U.S. Bureau of Labor Statistics publishes its February Consumer Price Index (CPI) report.

The rise in yields reflects market expectations for higher growth and inflation. (Source: St. Louis Fed)

Economists and analysts on average project that the headline CPI probably rose 1.7% over the past 12 months, accelerating from the 1.4% pace reported last month January, according to FactSet.
The core CPI, which excludes food and energy prices, probably rose 1.4% from a year earlier, the same pace as in January.
While those rates are still considered low, expectations for future inflation have been on the rise. Consumer inflation expectations for the year ahead have edged up to 3%, the highest since July 2014, based on a February household survey conducted by the Federal Reserve Bank of New York.
"Inflation risks are skewed to the upside," according to a Deutsche Bank research report published March 7.
The rapid rise in inflation-adjusted yields on U.S. Treasury bonds presents risk of an unwanted tightening of financial conditions, which might present a challenge to markets, according to Deutsche Bank: "We see limited scope for the market to further accelerate the timing of monetary tightening for the time being."

--Damanick Dantes

Original story found here:

Inflation Rate, Closely Tracked by Bitcoin Traders, Probably Accelerated in February

ICYMI

In case you missed it, here is yesterday's episode of First Mover:

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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