US Inflation Unchanged in February as Bitcoin Holds $70K

Bitcoin has lifted almost 7% since the weekend, holding above US$70k (AU$98k), despite ongoing geopolitical turmoil and relatively flat US financial markets. By contrast to BTC, the Nasdaq 100 was up just 1.22% in the past five days and the S&P 500 rose 0.10%. Gold was up 0.94%. 

Supporting the strength of the world’s largest crypto was good news on the US inflation front this week. The US Consumer Price Index data released on March 11 showed no change, coming in at 2.4%, in line with expectations.

“Bitcoin’s downside sensitivity has been relatively limited,” according to Aurelie Barthere, principal research analyst at Nansen. Speaking to CoinDesk, Barthere said it suggested that bitcoin marginal buyers were less aggressive than current active buyers in equities markets.

Related: Bitcoin Hovers Around $70K as Weak Demand and Defensive Positioning Signal Fragile Market, Says Glassnode

Also of note, the BTC-gold correlation has switched from negative to positive within one week. Bryan Tan, a trader at crypto firm Wintermute said the correlation moved from -0.49 to +0.16.

“If this correlation continues trending positively, it shifts the narrative around BTC in a conflict environment from ‘sell the risk asset’ to something more nuanced,” Tan said.

Worst of US Inflation Yet to Come?

The US CPI print showed month-to-month inflation for all items increased from 0.2% in January to a 0.3% rise in prices in February. Taking away volatile items — food and energy — core inflation saw an annual rise of 2.5%, but month-to-month inflation eased, rising 0.2% in February. 

However, the impact of the US-Israel war on Iran, and subsequent increases in oil prices, have not yet been reflected in the economic data. 

“These inflation numbers provide some comfort, but this month’s spike in energy prices make them a relic of the past,” David Russell, global head of market strategy at TradeStation, said.

Higher gas prices will add to the impact of Trump’s tariffs, which are increasingly being expressed in the prices being paid by US consumers. 

Related: Next 150 Days Make-Or-Break For Crypto, Says Swyftx Analyst Hundal

Despite the macro risks, options traders have been positioning for firmer prices, with growing bets on Bitcoin moving higher. Nick Forster, founder of onchain options platform Derive.xyz, told The Block that current options pricing implied a 35% chance that BTC lifts to above US$80k (AU$112k) by June.

The question remains whether Bitcoin’s price can remain steady amid soaring energy prices and potentially delayed US rate cuts that could dampen investor activity. 

The US Federal Reserve will next meet on March 17-18, and with inflation above its targeted 2%, most pundits expect the Fed to hold. 

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