This week, significant inflation indicators are set to be released in the United States, including the unadjusted annual core CPI rate in February, the annual PPI rate in February, and one-year inflation expectations. According to CME data, there is a 97% probability that the FOMC will maintain interest rates on hold on March 20. Following a robust rally last week, the broader cryptocurrency market is currently experiencing a period of consolidation. Notably, the leading cryptocurrencies Bitcoin and Ethereum have retraced from their recent highs of $70,000 and $4,000, respectively, while other altcoins that recorded substantial gains last week are also undergoing similar pullbacks.
Of particular focus in this week's economic reports is the release of U.S. CPI (Consumer Price Index) data on Tuesday. Forecasts indicate that the core price index may show a 0.3% month-on-month increase and a 3.7% year-on-year rise in February, marking the smallest annual gain since April 2021. Despite expectations for less frequent interest rate cuts by the Fed this year, any further easing in U.S. prices would reinforce the prevailing deflationary narrative. Swaps pricing suggests a projection of three rate cuts in 2024, down from six earlier this year.
The U.S. jobs data released last week did not significantly alter this outlook. While job creation surpassed expectations, the unemployment rate still reached a two-year high. This mixed data suggests that the labor market is gradually cooling, aligning with expectations for a soft landing in the U.S. economy. Chris Larkin, a strategist at Morgan Stanley E*Trade, commented that the jobs report does not necessarily indicate that the Fed is abandoning caution, but it also does not contain any factors that would disrupt its plans for interest rate cuts.
Insights provided by on-chain data provider Santiment reveal that Bitcoin and Ethereum exhibited significant gains last week, surpassing the returns of the S&P 500. Bitcoin saw a 10.0% increase, while Ethereum surged by 14.7%, following a modest 0.5% gain previously. The historical trend of sustained bull runs in the cryptocurrency market with minimal correlation to traditional stocks is being closely monitored by traders, who remain optimistic about its continuation. The divergence in performance between cryptocurrencies and traditional markets underscores the unique dynamics influencing digital asset valuations, fostering hopes for ongoing market resilience and expansion.
