Bitcoin Breaches $26,000 After Expected February CPI Print
Bitcoin’s (BTC) recent rally continues to gather momentum, boosted by concerns over traditional banking amid recent collapses and the expected inflation data. The world’s largest cryptocurrency rose nearly 10% in the past 24%, trading at $25,854 at the time of the writing, breaching $26,000 momentarily.
Bitcoin Rallies 30% Since SBV Collapse on Friday
Bitcoin’s price broke above the $26,000 mark on Tuesday amid investor concerns about the possible implications of the Silicon Valley Bank (SBV) collapse on the traditional banking sector. Since hitting a low on Friday, the world’s biggest crypto token rose roughly 27% to a 3-week high of $26,431.
The rally comes just a few days after the US regulators closed SBV after the bank came under severe pressure. The economists described it as the biggest banking failure since the 2008 global financial crisis. On Sunday, the regulators closed down Signature Bank too, the second-largest crypto-friendly bank after Silvergate, which also capitulated last week.
Analysts at Morgan Stanley said the banking crisis could signal better days are coming for bitcoin after the harshest-ever crypto winter over the past year.
“Bitcoin was created as a way for anyone to hold value in a private digital wallet without needing an intermediary bank to hold the value for them or to facilitate transactions.”
– strategists at Morgan Stanley wrote in a note to clients.
Still, the strategists said that bitcoin’s price is not entirely protected from the ongoing banking crisis. Even though cryptocurrency can operate without banks, “bitcoin’s price, and thus its purchasing power, has been and continues to be influenced by fiat central bank policy and needs banks to facilitate flows into crypto,” strategists added in a note.
February CPI Meets Expectations; Wall Street Divided Over the Next Fed Rate Hike Decision
As the latest BTC rally continued to pick up, the Bureau of Labor Statistics (BLS) released the new consumer price index (CPI) data, showing the annual inflation rate eased to 6% in February, in line with expectations. Core inflation, which disregards energy and food costs in its calculation, rose by 5.5% from last year and by 0.5% from January.
Now, all eyes are on next week’s Federal Reserve policy meeting. After implementing two 25 basis points (bps) interest rate hikes in 2023, the US central bank recently said it is considering accelerating the pace of rate increases to a half-point rise to slow down the growth of the US economy.
But in the wake of the banking crisis and the CPI print that met expectations, economists are divided on how the Fed will proceed with rate increases. Some on Wall Street expect another 25 bps increase, while others believe the Fed may not hike rates this month.
This article originally appeared on The Tokenist
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