Somewhat pessimistic rises in cryptocurrencies after US inflation figure

Despite the initial good tone, analysts point out that it is difficult for the reigning cryptocurrency to improve its current situation due to the uncertainty offered by the latest series of macroeconomic data. Katie Stockton, founder and managing partner of Fairlead Strategies, pointed out that Bitcoin appears "overbought", making it difficult to clear $25,000. As for Ethereum, Stockton considers that it´s looking just like Bitcoin, since both are part of a top-down-oriented market where macro forces are price action “as opposed to the fundamental value of things.”

On that note, the January PCE inflation data, the Federal Reserve's (Fed) favorite gauge, released on Friday was bad: the headline figure rose to 5.4% from 5.3% the previous month and core inflation rose to 4.7% from 4.6% the previous month. "We knew, from the earlier releases that US inflation wouldn’t slow as much as expected, but Friday’s PCE data showed that not only inflation didn’t slow in January, but headline figure ticked higher to 5.4% from 5.3% printed a month earlier, and core inflation ticked higher to 4.7% from 4.6% printed a month earlier. The latter fueled the Fed hike expectations, because a slower-than-expected easing in inflation is one thing, but rebound in inflation is another thing. And the latter is much less cool for the Fed, and the Fed expectations. A rebound in inflation is the worst nightmare for the Fed," explained Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

"And if the PCE drama was not enough, personal spending surged 1.8% in January, the strongest burst since March 2021, and the University of Michigan’s consumer sentiment index hit a 13-month high this month. It’s still much lower than the pre-pandemic levels, yes, but it also means that it has ways to recover," the expert added, as he believes that "the tight US jobs data, strong spending and improved sentiment may sound nice to you, but it sounds horrendous to the Fed.·

Also, a study presented on Friday by a quintet of Wall Street analysts and economists suggests that the Fed should raise rates to 6.5% to win the battle against inflation in the United States.

Other experts, such as Joe DiPasquale, CEO of 'crypto' fund manager BitBull Capital, are more optimistic. DiPasquale believes that Bitcoin is trying to find support in this "minor" price correction and that if it stays in the current range, we are "likely to see $25,000 and then $30,000." However, he warns that "a rejection from here could see $20,000 first, followed by $18,000."

This is the position of Michael van de Pöppe, founder of investment firm Eight, who recently noted that the reigning cryptocurrency could reach $40,000 and then undergo a severe correction to $20,000.

In any case, seeing the dependence that macro figures are having on the evolution of cryptocurrency prices, we will have to keep an eye on a series of data that will be known this week. In the United States, for example, the February consumer confidence index is scheduled for release on Tuesday and weekly jobless claims on Thursday. As for Asia, a region that experts believe could be the catalyst for the next bull market, the People's Bank of China will announce its trade balance figures on Tuesday and its inflation rate on Thursday.

In the rest of the market, there have been few movements and lukewarmness in most tokens. Highlights include rises of about 2% in Shiba Inu (SHIB) and losses of about 1% in Ripple (XRP).