Bitcoin Exceeds $26,000 After the Expected February CPI Leak
Bitcoin's (BTC) recent rise has gained traction, fueled by fears about traditional banking following recent crashes and the expected inflation figures. The world's largest cryptocurrency has risen about 10% in the last 24%, trading at $25,854 at the time of writing, briefly approaching $26,000.
Bitcoin's price surpassed $26,000 on Tuesday, as investors worried about the impact of the Silicon Valley Bank (SBV) failure on the traditional banking industry. From its low on Friday, the world's largest cryptocurrency has risen about 27% to a three-week high of $26,431.
The rise comes just a few days after SBV was halted by US regulators due to heavy pressure. Economists called it the largest banking collapse since the global financial crisis of 2008.
The regulators also closed down Signature Bank on Sunday, the second-largest crypto-friendly bank after Silvergate, which also surrendered last week. Morgan Stanley analysts believe the financial crisis might herald better times for bitcoin following the worst crypto winter in history.
“Bitcoin was created as a way for anyone to hold value in a private digital wallet without needing an intermediary bank to hold the value for them or to facilitate transactions.”
– strategists at Morgan Stanley wrote in a note to clients.
Yet, analysts claim that bitcoin's price is not fully immune to the current financial crisis. Even though cryptocurrency can function without banks, "bitcoin's price, and therefore purchasing power, has been and continues to be impacted by fiat central bank policy and requires banks to assist flows into crypto," analysts wrote in a note.
February CPI Matches Estimates; Wall Street Split on Next Fed Rate Hike
As the recent Bitcoin surge accelerated, the Bureau of Labor Statistics (BLS) issued new consumer price index (CPI) statistics, revealing that annual inflation fell to 6% in February, as expected. Core inflation, which excludes energy and food expenses, increased by 5.5% year on year and by 0.5% month on month.
All eyes are now on the Federal Reserve policy meeting next week. After two 25 basis point (bps) interest rate hikes in 2023, the US central bank has stated that it is contemplating speeding the pace of rate increases to a half-point increase to restrict the US economy's development.
Yet, analysts are divided on how the Fed will proceed with rate rises in the aftermath of the financial crisis and the CPI data that matched forecasts. Some on Wall Street anticipate another 25 basis point rise, while others feel the Fed will not raise interest rates this month.