Cryptocurrencies experienced a surge on Tuesday evening, driven by a hotter-than-anticipated U.S. inflation reading that dampened expectations for interest-rate cuts. Bitcoin, the largest cryptocurrency by market capitalization, saw a decline of about 1% to $49,500 from its earlier position slightly above $50,000 earlier in the day.
In January, the consumer price index (CPI) increased by 0.3% from December, while on an annual basis, it rose by 3.1%. Economists had anticipated a CPI rise of 0.2% month over month and 2.9% from the previous year. Core prices, which exclude the volatile food and energy components, experienced a 0.4% monthly increase and a 3.9% rise from the previous year. The expected core CPI surge for January was 0.3%, with a 3.7% increase from the previous year.
Despite the decline in Bitcoin, the global cryptocurrency market cap now stands at $1.87 trillion, showing a 3.66% increase in the past 24 hours. The top gainers in the past 24 hours include Pyth, Stacks, and Blur, which saw gains of 9.80%, 9.03%, and 6.98% respectively.
On the other hand, stocks experienced a decline on Tuesday as hotter-than-expected inflation data for January led to a spike in Treasury yields. The Dow Jones Industrial Average dropped by 524.63 points, or 1.35%, while the S&P 500 and Nasdaq Composite fell by 1.37% and 1.8% respectively.
The release of the CPI data also resulted in a surge in Treasury yields, with the 2-year yield exceeding 4.66% and the 10-year yield surpassing 4.32%.
Cryptocurrency analyst Michael Van de Poppe noted that Bitcoin is undergoing a slight correction following the higher-than-projected CPI. He believes that as long as Bitcoin stays above $46,000, the trend remains up. Van de Poppe also suggested that Bitcoin and the digital asset market may be on the verge of a “crypto dot-com bubble,” predicting that widespread adoption of Bitcoin could trigger a substantial rally, potentially propelling its price to well above half a million dollars.
Another cryptocurrency analyst, Ali Martinez, pointed out that Bitcoin seems to be forming an ascending triangle on lower time frames, suggesting a potential 1.60% increase in the short-term. However, resistance at $50,200 and support at $50,000 should be watched closely.
Overall, the surge in cryptocurrencies amid the U.S. inflation reading reflects the growing interest and adoption of digital assets as an alternative investment. Investors are closely monitoring market developments and economic indicators to make informed decisions in this evolving landscape.
