Crypto Markets Rally on Bets Fed Will Slow Pace of Rate Hikes – The Defiant

The Fed is likely to go for a small interest rate hike, if at all, that is

Cryptocurrencies and stocks rose on Friday after the release of data showing US inflation cooling off in February.

Bitcoin and Ether rose just over 2% after US inflation rose at a slower-than-expected pace, signaling that the Federal Reserve may slow the pace of interest rate hikes.

Crypto rises on the prospect that the Fed may slow its rate hikes. Lower rates make borrowing cheaper, which in turn means more capital will be available to buy risky assets. Digital assets have rebounded this year from the worst bear market since 2019, partly as speculation grows that the US's fight against inflation with aggressive monetary policy is finally paying off.

cooling inflation

The Commerce Department said Friday that the personal consumption expenditures price index, stripped of volatile food and energy prices, had risen three-tenths of a percent month-over-month and 4.6% year-over-year.

that measure tracks the "broadest set of goods and services," according to the San Francisco branch of the Federal Reserve, and is often called the Fed's preferred inflation gauge.

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According to crypto investment firm GCR, the core PCE price index figures were better than expected. And they show that inflation in the US is cooling from Januarywhen they were up six-tenths of a percent month-over-month and 4.7% year-over-year.

banking crisis

Coupled with a banking crisis triggered by the Federal Reserve's aggressive rate hikes, the data has bolstered investor predictions that the Fed will go for a small hike at its next meeting on May 2, if it decides to raise rates. interest rates.

A week ago, just after rival UBS's emergency takeover of Credit Suisse, and just a week after the collapse of Silicon Valley, Silvergate and Signature banks, investors were bet the Fed would keep interest rates flat at its May 2 meeting, according to the CME FedWatch tool.

But fears of a widespread banking crisis have eased somewhat, and odds of a slight interest rate hike shot up earlier in the week. That belief hardened on Friday after the release of the inflation data. Investors now believe that the odds of no increase or of a 25 basis point increase are roughly equal.

older engines

Stocks rose on Friday, with the S&P 500 and Nasdaq rising 1.3% and 1.6%, respectively.

In the crypto markets, Friday's big winners include liquid staking protocol Lido, along with Ethereum competitors Cardano and Fantom, each of which grew more than 6% day-over-day.

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Meanwhile, Binance's BNB token was flat. Investors fled the token on Monday after the Commodity Futures Trading Commission sued Binance for allegedly allowing Americans on its international platform.