On March 14th, following another higher-than-expected inflation data, the US stock market and the cryptocurrency market experienced a decline.
The US Producer Price Index (PPI) for February increased by 0.6% compared to the previous month, exceeding economists’ expectations of 0.3%. Sticky inflation seemed to dampen investors’ hopes for an imminent interest rate cut, leading to a decline in major US stock indices. The S&P 500 Index fell by 0.3%, the Dow Jones Industrial Average fell by 0.4%, and the tech-heavy Nasdaq Composite Index fell by 0.3%.
In the cryptocurrency market, Bitcoin approached $73,800 on Thursday morning, but plummeted by over 6% after the economic data was released, briefly falling below $69,000. However, buying pressure pushed for a rebound, and as of the time of writing, it had recovered to around $70,500.
Multiple analysts pointed out that Bitcoin may enter a consolidation period, even with a possible 20% pullback, as the momentum that set new highs in the past two weeks begins to weaken. Mainstream altcoins such as Ethereum, XRP, MATIC, and AVAX experienced a 5%-7% decline during the day but partially recovered by the time of writing.
Solana’s native token (SOL) performed strongly amid the market downturn, reaching its highest price in 26 months before the pullback. SOL rose by 5% throughout the day, with a peak of $173.81, making it one of the best-performing assets among the top ten cryptocurrencies.
According to QCP Capital, a digital asset hedge fund, SOL has benefited from the capital rotation as Bitcoin’s upward momentum seems to have stalled. Cryptocurrency trader Bob Loukas predicts that SOL has surpassed a key resistance level and will further rise to $250.
Meanwhile, Dogecoin surged nearly 10% after Elon Musk hinted that Tesla is considering adding it as an official payment method.
Are macro risks returning to the market? Recently, investors have been closely monitoring inflation, and this week’s data seems to have affected their expectations for when and how often the Federal Reserve will cut interest rates this year. Earlier this week, the Consumer Price Index (CPI) also exceeded expectations, with an annual inflation rate of 3.2% and a core rate of 3.8%.
Earlier this month, the yield on 10-year US Treasury bonds briefly fell below 4% but has now risen to 4.30%. At the same time, the US dollar has reversed its downtrend that began in mid-February and has risen by about 1% over the past week, including a 0.5% increase on Thursday. Under the same conditions, rising interest rates and a stronger US dollar often have a negative impact on risk assets like Bitcoin.
Financial commentator Tedtalksmacro predicts that with the support of the data, the Federal Reserve will “maintain higher rates” for a longer period. However, he also states, “I believe that for institutional flows, the macroeconomy is a secondary driver for the current market.”
The next meeting of the Federal Open Market Committee (FOMC) is scheduled for March 20th, and it is not expected to cut interest rates. According to the latest estimates from the CME FedWatch tool, the probability of an FOMC interest rate cut in May is only 6.2%, and the probability of a cut in June is less than 60%.
Author: Mary Liu from BitpushNews
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2023 Market Trends
MEME
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Ethereum
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Bitcoin
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Inflation
Interest Rate Cut
Elon Musk
Explanation: All articles from Bitpush represent the author’s views and do not constitute investment advice.
Original Article Link: https://www.bitpush.news/articles/6394700
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