Cryptos and Bitcoin fall again after poor data in the US and Europe

Cryptocurrencies continue to waver. If yesterday, on Wednesday, we talked about rises, today it is time to talk about falls. Bitcoin (BTC) drops 1.4% in the last hours and loses $23,500 again, while Ethereum (ETH) falls 0.6%, back below $1,650.

Is Bitcoin doomed to continue trading in the wide range in which it has been stuck for weeks? According to numerous experts, yes. Lex Sokolin, director of cryptoeconomics at ConsenSys, believes that the cause is none other than persistently high inflation, in the world in general and in the United States in particular. Both BTC and ETH, the two main tokens in the market, rose nearly 40%, but have lost the momentum with which they started the year following a series of negative macroeconomic data and the resulting lack of optimism of investors.

"I don't see any dramatic shift in market regime. We still have stubborn inflation and central banks are committed to raising rates until inflation cools further. That means that tech equities and crypto assets will continue trading at suppressed multiples, and the housing market is in danger," Sokolin stated to the 'CoinDesk' media outlet.

In Europe, February's inflation data were not positive. And on the other side of the Atlantic, the way things are going, it doesn't look like it's going to be much better. The latest U.S. manufacturing ISM reading showed a slower contraction in the sector in February, but the improvement from the previous month was less than expected. "A slowing economic growth is not bad news for the Federal Reserve (Fed), but the mounting price pressure is. This is what the ISM report revealed yesterday," stressed Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

As if that were not enough, Fed bankers continue to make it clear that interest rate hikes may return to 50 basis points after loosening the pace in early February. This was stated by Neel Kashkari, president of the Minneapolis Fed and one of the most hawkish members of the FOMC, who acknowledged that he was "open" to both 25 and 50 basis points ahead of the March 22 meeting.

In any case, the hawkish Kashkari pointed out that the most important thing will not be the pace of rate hikes, but the terminal rate. In recent months, the Minneapolis Fed president has reiterated that the only way to tame inflation is to take interest rates to 5.4%, significantly above the Fed's estimate. "We need to raise rates aggressively to put a lid on inflation and then let monetary policy work its way through the economy," he commented in February.

The Atlanta Fed's Bostic, meanwhile, believes the terminal rate should be slightly lower, but is betting on not moving them until well into 2024. The probability that CME's FedWatch tool gives to a 50 basis point hike continues to rise and is above 30% on Thursday. Less than a month ago, on February 6, it put the probability of such a scenario at 6%.

On a purely corporate level, Silvergate Bank fell sharply after announcing that it will take longer than expected to publish its annual results. Coinbase, meanwhile, continues its strong start to the year driven by its recently launched Ethereum layer 2 solution, Base. In turn, a Visa spokesperson denied that the company has abandoned its plans with cryptocurrencies.

In other market news, there have been significant drops of 2% for the main tokens on the market. Polygon (MATIC) and Solana (SOL) were the worst performers, falling almost 3%.