An analyst at the TickMill Group noted that Bitcoin prices bounced to $26,000 on Tuesday for the first time since June 2022 thanks to largely on-target inflation data.
“The move came in response to a confirmed drop in US inflation last month which has bolstered expectations of a smaller Fed rate hike this month,” wrote TickMill Group’s Market Analyst James Harte.
“With tech stocks and crypto among the hardest hit by the recent USD upswing over February, these assets have been quick to bounce back given the shifting perspective taking hold on markets this week.”
According to TickMill, with concerns over liquidity in the banking sector as well as a fresh drop in inflation, the outlook for March is now split between a smaller 25 basis point rate hike and no hike at all.
“Against this backdrop, Bitcoin looks to have room to continue to recover near-term, particularly if USD continues lower ahead of the Federal Open Market Committee (FOMC),” added Harte.
“Today’s US data has the potential to drive the risk recovery further if the expected drop in retail sales is seen. With pricing for an unchanged outcome at the FOMC likely to rise on any incoming data weakness ahead of the FOMC, Bitcoin risks appear skewed to the upside for now, creating similar bullish opportunities across the crypto space.”
Bitcoin prices have fallen back from Tuesday's $26,000 high to $24,858 on Wednesday morning.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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