A higher inflation figure will not stop the crypto bull market, says Nansen analyst
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The U.S. Labor Department said core inflation hit 3.2 percent in February, beating expectations of 3.1 percent. Although this could be seen as an issue for crypto investors, Aurélie Barrere, chief research analyst at on-chain analysis firm Nansen, said that they do not expect the crypto bull market to stop yet, and that it will influence prices in the coming weeks. .
“There's a lot of momentum going on in crypto (price and news flow, see recent announcements at BlackRock splitting its own BTC ETF into asset management funds),” Barthere explains.
The next opportunity scenario is a review of the expected Fed rate cut. Currently, futures markets have four price cuts in December 2024, Nansen's chief research analyst highlighted, which should shave off two to three price cuts.
“FOMC [Federal Open Market Committee] Meeting forecasts will be updated this month and in 2024. We expect an average size reduction of 2-3. We do not expect a significant sell-off for crypto as this price has occurred without questioning the bull market (consolidation) of the past few months. on significant sales). Interestingly, gold is ‘only' down 1%, and US 2yrs yield is 5bps from CPI release.
As for where the U.S. economy is headed, Barrere said, the slight reversal in the headline CPI combined with last week's somewhat weak U.S. employment report is sending “hot and cold” signals to the Fed.
“This highlights the high level of uncertainty in the US economic path, with the soft landing being the main scenario (bullish crypto) so far. There are two tail scenarios (bearish crypto), 1) inflation re-accelerates and 2) real growth slows significantly. What we have now Data does not clearly indicate these tail situations.What should be noted is that asset prices, equity, crypto, credit are not pricing in the probability of these tails occurring.
Asset prices move significantly only after the market receives a clearer message from the information on the two conditions mentioned by Barter.
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