Inflation data comes in hot, dampening chance of rate cuts
Wednesday’s release of the US consumer price index (CPI) revealed a 3.5% year-on-year increase in March, surpassing February’s 3.2% jump and exceeding the anticipated 3.4%. Consequently, the market has scaled back expectations for interest rate cuts in 2024, now forecasting only two quarter-point cuts. Analysts now estimate a 50% probability of a third rate cut by the end of 2024, a significant decrease from the initial projection of six at the beginning of the year.
Risk assets responded poorly to the CPI numbers as major US stock indices such as the S&P 500, Nasdaq, and Dow Jones all ended Wednesday down about 1%. Rates moved higher, especially in the front-end and belly of the curve with the five-year yield higher than the 30-year yield for the first time since September. USD also surged as the euro fell to its lowest level against the dollar since July. Precious metals such as gold and silver, which have outperformed lately, pared back some of their recent gains.
BTC Price Fluctuates as Halving Event Approaches
BTC price action remains choppy as the halving approaches, which is estimated to take place on April 20th. With the price of BTC nearing all-time high levels again this week at $72.6K, something that has never happened right before a halving event, some investors believe there is too much optimism priced into BTC and there could be a correction in the days before and after the halving.
In his latest blog post, Arthur Hayes, co-founder of crypto exchange BitMEX, shared his perspective on the impact of halving events on crypto prices. He noted the prevailing belief that halvings are bullish for crypto prices, but cautioned that when consensus forms around an outcome, the opposite often happens. Hayes anticipates a temporary slump in Bitcoin and crypto prices around the halving. However, he remains optimistic about the event’s long-term implications, expecting prices to rally later in the year, as observed in the previous three BTC halvings in 2020, 2016, and 2012.
Chinese Asset Managers Ready to Adopt Spot Bitcoin ETFs
Spot Bitcoin ETFs could be set to launch in Hong Kong later this month, with the first approvals potentially coming as early as next week. The launch will mark the first spot BTC ETFs in Asia and could provide a further boost to crypto adoption and BTC prices following the successful launch of spot BTC ETFs in the US earlier this year.
Several prominent Chinese asset managers, including Harvest Fund Management and Southern Fund, boasting a combined total of over $500 billion in assets, are among the applicants. The stance on cryptocurrency in Asia has been varied, with China having a history of banning crypto trading and mining. However, the potential introduction of ETFs could offer Chinese funds a compliant avenue to access Bitcoin, potentially shifting the landscape for crypto investment in the region.
