Bitcoin BTC price hovers below $26,000 as investors await Fed rate hike decision [Advance Cash ]

Bitcoin Btc Price Hovers Below $26,000 As Investors Await Fed Rate Hike Decision

Bitcoin at least for a while loved the sound of falling inflation, as evidenced by Tuesday's release of the May Consumer Price Index (CPI).

The largest cryptocurrency by market value was recently trading at $25,846, down 0.2% in the past 24 hours and above the $26,000 upper perch it assumed in the market. hour after the US Bureau of Labor Statistics announced that the CPI rose 4%, better than the 4.1% forecast and then the 4.9% in April.

BTC has hovered below $26,000 for much of the past four days as investors put aside the angst of Securities and Exchange Commission (SEC) lawsuits against crypto exchanges Binance and Coinbase, and waited for the latest inflation reading and Wednesday's interest rate decision from the Federal Reserve.

The Fed now looks likely to end its year-long campaign of hawkish monetary policy. Just a year ago, the CPI was raging at 8.6%, prompting the Federal Reserve to hike the fed funds rate by 75 basis points (bps) and send risk assets skyrocketing.

"While today is good news for the US economy and Bitcoin, any wobble that may come from tomorrow's interest rate decision or the looming recession on the horizon in the US is also likely to prove beneficial for crypto assets,” Tim Frost, CEO of digital wealth platform, Yield App, wrote in an email to CoinDesk. "Even altcoins, some of which have lost up to 30% in the past week, will benefit."

Frost suggested the SEC lawsuits brought "certainty" to the markets by ending speculation over whether the agency would take legal action against two of the crypto industry's most prominent companies. . Lawsuits can also force courts and regulators to agree on a designation of cryptos as securities, commodities or otherwise.

“With US investors now perhaps largely shaken by these assets, we could see the start of new investments in these tokens that are not tied to the US economy or US politics at all,” Frost wrote.

Ether, the second-largest crypto by market value, followed BTC's lead, rising initially before giving back some of its gains. ETH recently changed hands at around $1,735, roughly where it stood on Monday at the same time. Among the 19 tokens mentioned in Binance or Coinbase combinations, or both, ALG AND MATIC, the smart contract blockchain tokens Polygon and Algorand, recently rose by 0.3% and 0.8%, while AXIE, the native crypto of the Axie Infinity gaming platform, fell slightly. Binance's BNB token recently rose by 3.3%. The CoinDesk Market Index, a measure of overall market performance, rose 0.3%.

Meanwhile, major equity indices were largely supported by the CPI report, with the tech-heavy Nasdaq Composite and S&P 500 rising 0.8% and 0.6% respectively. The yield on 10-year U.S. Treasuries hit a still-robust 3.8%, while Brent crude, a measure of energy markets, fell slightly to trade at $73 a barrel , well above its highs above $112 a year ago.

In an email to CoinDesk, Oliver Rust, product manager at independent inflation data aggregator Truflation, noted falling energy prices and headline inflation readings, and mildly encouraging signs. indicating that the hot job market was cooling. Undesirable turns in these macro indicators have consistently disrupted crypto assets. But Rust also wrote warily that "the economy appears to be trending toward a quarter of negative growth at the very least."

“The technical definition of a recession is two consecutive quarters of negative growth,” he wrote. “As such, if GDP growth continues to decline in the second quarter, the United States will find itself on shaky ground. The Central Bank will be forced to divert its mission of reducing inflation to avoid a recession, in especially with the start of the 2024 U.S. presidential election campaign fast approaching.With interest rates at current levels, we think this is a realistic goal, but higher rates could end up being the last straw. 'water.