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| By Sam Blumenfeld |
Bitcoin (BTC, Tech/Adoption Grade “A-”) and the broad crypto market are trading higher again after reversing the minor recent pullback. The move is a positive sign that could lead to an extension of the market’s hot start to the year, but the Federal Reserve could make a rally more difficult.
Both consumer and producer price inflation data came in higher than expected this week, which will likely lead to more rate hikes in the short term. CPI rose 0.5% in January and 6.4% over the prior year, leading to a brief selloff for traditional equities.
Combine these numbers with the continued strength of the labor market, and it seems even more likely the Fed will take longer to pivot.
The market has adjusted its expectations, pricing in a 97% chance that the target interest rate peaks above 5% in July.
Crypto has maintained its momentum despite the recalibrated expectations. Bitcoin is up about 3% today after crossing the $24,000 level again. The market leader was able to find support at $21,500 as the market swung back positively on Tuesday and Wednesday.
BTC broke through its 21-day moving average on Wednesday, reestablishing its short-term momentum for now. The market leader is up about 46% since the beginning of the year.
It could continue climbing after the market’s healthy breather. But there is reason to believe this short-lived pullback wasn’t strong enough to be called an 80-day cycle correction by our Crypto Timing Model. That could mean the real medium-term correction is still ahead of us.
Here’s Bitcoin’s price in U.S. dollars via Coinbase (COIN):
Ethereum (ETH, Tech/Adoption Grade “B”) is up about 3% in today’s trading as it eyes the $1,700 level again. ETH dipped to about $1,460 during the brief pullback, but it has finally broken through its pre-FTX collapse level, eclipsing $1,740 yesterday before retreating.
ETH stands 41% higher than it did at the beginning of the year, which is slightly behind Bitcoin’s pace. That’s not unusual to see as the market exits crypto winter, because Bitcoin is usually the market leader that gets the action going.
Ethereum crossed its 21-day moving average during Wednesday’s big move, and it could extend the breakout if the broad market maintains momentum.
Here’s Ethereum’s price in U.S. dollars via Coinbase:
Notable News, Notes and Ratings
- Another flurry of crypto upgrades brings the number of “Buy”-rated cryptocurrencies to 23. Of these “Buy"-rated cryptocurrencies, 13 were recently upgraded.
Eight cryptocurrencies are currently rated “B” or better, with Bitcoin standing out as the only “A-” rating.
1. Bitcoin (BTC, Overall Grade “A-”)
2. Polygon (MATIC, Overall Grade “B+”)
3. Chainlink (LINK, Overall Grade “B”)
4. Decentraland (MANA, Overall Grade “B”)
5. Ethereum (ETH, Overall Grade “B”)
6. Litecoin (LTC, Overall Grade “B”)
7. OKB (OKB, Overall Grade “B”)
8. Uniswap (UNI, Overall Grade “B”)
What’s Next
The crypto market’s pullback was notably short, so it’s an excellent sign to see positive price action despite the greater likelihood of the Fed waiting longer to pivot. Crypto could see a larger retreat if macroeconomic conditions worsen, but its resilience is encouraging as it escapes the prolonged bear market.
Regulatory uncertainty is another factor to watch for crypto prices, but an established framework should help the asset class move forward toward greater mainstream adoption.
Several governments are taking steps to ensure they create favorable environments to promote adoption, which should help the next sustainable upswing.
Best,
Sam
