Cryptos rebound after the US CPI; Bitcoin regains $22,000

Volatility has defined the last few sessions in the cryptos sphere. After several days of losses prompted by the U.S. Securities and Exchange Commission's (SEC) regulatory advance on Kraken and the Binance USD stablecoin (BUSD), investors were convinced that February's inflation reading could deliver a negative surprise and sink cryptos´ prices. Ultimately, the tepid CPI data, which declined, but less than expected, left markets a bit confused.

"Bitcoin enjoyed a decent rebound on Tuesday despite broader market sentiment being more challenging on the back of the US inflation report," explained Craig Erlam, senior market analyst at Oanda. The expert pointed out that "resilience" continues to be seen in cryptos, which is "very encouraging despite regulatory headlines not being particularly good."

"Of course, it's now retraced back to a level that was a notable area of support in late January and early February before it corrected and we'll soon see whether that's become a bearish resistance zone or the corrective move has run its course," he added.

The experts at Oxford Economics believe that the inflation data will not sit well with the Federal Reserve (Fed), as "came in stronger than we anticipated." "This coupled with the tight labor market and net easing in financial market conditions may warrant a change to our forecast for the fed funds rate," they explained, while noting that placing the Fed's terminal rate at 5.25% "would be broadly consistent with financial market expectations."

In turn, analysts at Pantheon Macroeconomics estimated that this report "won’t change anyone’s mind about the inflation picture; both hawks and doves will find something to highlight. It does not change the very high likelihood of a 25bp hike in March, and it says nothing about May; that’s too far off," they stressed. And the reality of the situation has proven them right.

In the hours following the release of the report, Dallas Fed President, Lorrie Logan, assured that the central bank should remain prepared to continue with rate hikes in the face of stubborn inflation. Meanwhile, Philadelphia Fed President, Patrick Harker, noted that the end of rate hikes could be closer than people think.

On the other hand, crypto investors seem to have shaken off fears of further regulation of stablecoins following SEC developments on Kraken and Binance USD. Paxos Trust, the company behind the Binance-licensed stablecoin, announced that it will stop issuing new 'tokens' next February 21, but assured that it will defend in court that BUSD is not a security as argued by the Commission.

"The lack of clarity on the regulatory treatment of stablecoins in the U.S. could have significant impacts on the industry. Capital may migrate to stablecoins issued in jurisdictions with more tailored regulatory frameworks. Also, this may result in capital migration to jurisdictions with higher risk tolerance, which could lead to more exotic products that carry higher risks," Cristiano Ventricelli, assistant vice president at Moody's Investors Service, told Seeking Alpha.

Likewise, some analysts pointed out that the SEC's offensive on stable coins has little to do with these tokens and much to do with Binance, which is being investigated by the U.S. Justice for alleged money laundering. In recent weeks, the world's largest exchange has been linked to the closed Bitzlato exchange and has made a series of errors that have aroused many investors´ doubts.

In other market news, there have been widespread rises. Ripple (XRP) and Solan (SOL) rebounded 3%, while Cardano (ADA) soared 7%. Polygon (MATIC), Dogecoin (DOGE) and Shiba Inu (SHIB) rose more than 4%.