Bitcoin weathers global market slump sparked by inflation jump
BITCOIN rode out a surprisingly strong United States inflation print that roiled global markets by dimming hopes for rapid interest-rate reductions.
The digital asset traded at US$49,500 as at 10.21 am on Wednesday (Feb 14) in Singapore, near the highest level in over two years and little changed since Tuesday’s publication of above-forecast figures on US consumer prices in January.
In contrast, the S&P 500 Index slid 1.4 per cent – its worst CPI-day performance since September 2022 – while gold slumped and bond yields soared as traders dialled back expectations for a Federal Reserve rate cut before July.
Bitcoin showed “impressive resilience despite the overnight deterioration in risk sentiment”, Tony Sycamore, a market analyst at IG Australia, wrote in a note. At the same time, separate technical analysis based on chart patterns signals the possibility of a temporary dip to the high US$30,000s, he said.
Sector-specific factors have been supporting Bitcoin, including the debut of US exchange-traded funds dedicated to the token. The batch of products from the likes of BlackRock and Fidelity Investments have attracted a net US$3.3 billion since they began trading on Jan 11.
Meanwhile, the so-called Bitcoin halving due in April will curb the supply of the largest digital asset, a development viewed by many as a prop for prices based on historical precedent.
“We expect the market to take a short pause here after a spectacular four-month-long rally before the upcoming Bitcoin halving takes over the narrative,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets.
Bitcoin has tripled since the start of last year in a comeback from the 2022 digital-asset rout. Wagers in the options market indicate traders are targeting prices beyond the record of almost US$69,000 achieved in November 2021. BLOOMBERG
