Bitcoin and other cryptocurrencies edged higher Monday, remaining at some of the highest levels for digital assets since last summer, as traders eye inflation data in the coming days as possible catalysts for the next leg upward.
Indeed, Bitcoin remains highly sensitive to the macroeconomic backdrop and remains correlated with the stock market, swinging in step with the Dow Jones Industrial Average and S&P 500 as a leading indicator for risk sentiment. Much of the focus has been on U.S. economic data that could inform the Federal Reserve’s next move on interest rates, though the jobs report last Friday failed to move the needle much.
Aggressive monetary policy and a spate of interest-rate hikes from the Fed over the past year—a bid to tame decades-high inflation—has been a critical headwind for crypto prices and stocks alike, dampening demand for riskier assets. Much of the rally in Bitcoin since the start of 2023 has come amid expectations that the Fed will soon become more accommodative, including possibly taking its first breather in this rate-hike cycle when its policy-setting committee meets over May 2-3.
Ahead of the next Fed decision in May, inflation data due this week loom large. The March consumer-price index (CPI), a leading inflation indicator, will be released Wednesday while Thursday will usher in last month’s producer-price index (PPI).
Traders expect these data points, whether they spur expectations holding rates steady in May or solidify bets of yet another rate hike, could help shake Bitcoin out of its recent holding pattern.
