BTC Price Steadies With One Eye on Trump’s First Inflation Report
The crypto markets are showing signs of resilience as Bitcoin rallies above $81,000, gearing up for the critical U.S. inflation report set to be released tomorrow. This recovery has been predominantly driven by layer-1 and layer-2 cryptocurrencies, alongside a notable uptick in gaming tokens.
This upward movement coincides with indications of “peak fear” in the financial markets, a scenario often observed as markets approach their bottom. Notably, the VIX—Wall Street’s fear gauge—has recently shown a rare positive reading in the spread between one- and six-month futures, suggesting market participants expect short-term volatility to exceed longer-term volatility. A similar inversion is noted in Volmex’s Bitcoin volatility index.
“Is the worst behind us? It’s impossible to say,” stated Ilan Solot, a senior global market strategist at Marex Solutions. Despite current hesitance, he hinted that the risk-reward ratio for entering long positions in U.S. stocks is increasingly appealing. However, the inverted VIX signifies market stress, potentially reflecting extremes in sentiment.
Bearish positioning in the Japanese Yen indicates that this haven currency’s rally might be nearing its limit, which could in turn provide a lift to riskier assets. The Truflation U.S. Inflation Index reports a current inflation rate of 1.35%, a significant drop from February’s high of over 2%. Analysts anticipate a month-over-month increase of 0.3% for February’s inflation data from the Bureau of Labor Statistics, which would mark a slowdown from January’s 0.5%.
This softer reading could bolster trader expectations for rapid Federal Reserve rate cuts beginning as early as June. However, Federal Reserve Chairman Jerome Powell has articulated the need for clarity regarding President Trump’s policies, implying that lower CPI data alone might not be sufficient for decisive rate reductions.
Conversely, an unexpectedly high CPI reading could stymie market recovery efforts, with some analysts forecasting a drop in Bitcoin’s price to as low as $74,000. “A bearish pattern continues on daily charts, exacerbating sell-off pressures following a failure to maintain above the critical 200-day moving average,” cautioned Alex Kuptsikevich, a senior market analyst at FxPro.
On the macroeconomic front, key data releases are forthcoming. On March 11 at 8:00 a.m. ET, the Brazilian Institute of Geography and Statistics will publish January industrial production data, while at 10:00 a.m., the U.S. Department of Labor is set to release the JOLTs report, which details job openings and separations.
Investors will also be monitoring speeches from key figures, including European Central Bank President Christine Lagarde on March 12, and further inflation data releases from both the U.S. and Brazil later that day.
Meanwhile, the cryptocurrency landscape continues to evolve. Grok Coin, inspired by xAI’s Grok AI, launched recently on Base, attracting significant attention with an AI-controlled wallet that generated over $200K in fees shortly after launch. However, the promotional efforts by Base’s official account have stirred discontent among some developers who feel overshadowed despite their own contributions to the platform.
In derivatives trading, Bitcoin and Ethereum show differing trends, with Bitcoin’s basis stabilizing at a healthy rate while Ethereum’s falls to its lowest since July at an annualized 5%. Transaction volumes and price movements continue to reflect a cautious sentiment among traders, particularly as Bitcoin’s Relative Strength Index (RSI) hints at potential bullish divergence.
The global economic backdrop remains tenuous, with geopolitical tensions and competing economic policies influencing market behavior. Stakeholders are advised to remain vigilant amidst this backdrop of uncertainty and volatility as crucial economic indicators roll out in the coming days.
