1 min readCould macro indicators reassert their influence on digital assets?
For the third time in a row, US CPI came in above expectations, at 3.5% in March. This compares with 3.2% in February and 3.1% in January. While the Fed was willing to brush off the previous higher-than-anticipated figures on the back of seasonal nuances, the latest reading could be detrimental to the case for a June rate cut. This has already been reflected in forecasts, with consensus now reflecting only a 19% chance of a rate cut in June, against 43% before figures got released.
While so far this year, macroeconomic factors have been overshadowed by the spot Bitcoin ETF launches, declining net inflows and ETF volumes are shifting the Bitcoin and crypto narratives back towards macro indicators, meaning that decisions by the Fed are likely to have a heavier impact on prices than in Q1 this year. However, Fed Chair Jerome Powell did state last week that “the policy rate is likely at its peak for this tightening cycle”, meaning that, more likely than not, liquidity in crypto markets should increase rather than the other way around, which would be supportive to asset prices.
