Bitcoin Soars despite US PPI Miss and Reduced Fed Rate Cut Odds

On February 16, the price of Bitcoin remained stuck at $52,000 as the latest macro data from the United States exceeded expectations. The Producer Price Index (PPI) numbers for January added to concerns about inflation in the US, with PPI coming in at 0.9%, slightly lower than the previous month but still higher than market forecasts. This, combined with the Consumer Price Index (CPI) data, made investors more cautious about when the Federal Reserve would ease fiscal policy. The chances of a rate cut at the Fed’s March meeting dropped to 8.5% from the 17.5% at the beginning of the week. As a result, a March rate cut is highly unlikely, and even a May rate cut is in question.

Bitcoin reached $52,884 the day before, its highest level since late November 2021, but faced selling pressure from bulls. Analysts noted the significance of the 21-period exponential moving average (EMA) at around $51,000, suggesting that there might be choppy price action before a significant move. There is concern that a slowdown in interest in US spot-Bitcoin exchange-traded funds (ETFs) could lead to a major price correction. Despite the ETFs removing more Bitcoin from the market than they are adding, market observers are nervous about the impact of a decline in ETF interest. Some analysts have suggested that a flatline or normalization of net inflows to Bitcoin ETFs could trigger a 20-30% retracement in the price of Bitcoin, with potential price floor levels extending down to $34,000.