Risk assets such as Bitcoin are unrelated to expectations for interest rate cuts: Analysts point out | CoinDesk JAPAN

• Risk assets like Bitcoin appear resilient even if U.S. inflation stalls and the probability of the Fed cutting interest rates in the first half of this year decreases, analysts said.
• Prediction markets seem confident that BTC will hit a new all-time high this year.

Risk assets like Bitcoin (BTC) are doing well, analysts at data aggregator Truflation said on February 13, as the US Federal Reserve (Fed) looks to cut interest rates following a better-than-expected US inflation report. He made this statement after expectations for the cryptocurrency declined and crypto assets (virtual currency) suffered some losses.

According to the US Consumer Price Index (CPI) report for January, health care and utility costs rose due to the tight labor market, while food, alcoholic beverages, clothing, and durable goods were The discount is due to a return to normal purchasing behavior after the holiday season, Truflation wrote in a recent report.

Bitcoin fell from $50,000 to around $48,800 after the CPI numbers caused traders to push back their first predictions for a rate cut to July. However, the decline was short-lived, with the price recovering to $49,500 at the start of Asian trading hours, according to CoinDesk data. Since then, BTC has risen to $51,000.

“Bitcoin pulled back a bit on this news, but risk assets in general are in the market as the majority of market participants believe they are “They are acting as if a March rate cut is still on the table, even though they don't expect it to.”

A bet on prediction market Polymarket shows that there is a 59% chance that Bitcoin will hit a new all-time high in 2024, while another bet shows BTC hitting an all-time high before Ethereum (ETH). The probability of doing so is 66% (at the time of writing).

“A rate cut is likely to be held off until at least May or June, until economic data softens,” Rust said. “However, the market may have simply accepted the fact that higher interest rates will continue for a long time and learned to deal with this new reality.”

｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: Federal Reserve Chair Jerome Powell (Helene Braun/CoinDesk)
｜Original text: Risk Assets Like Bitcoin Are Defying Low Fed Rate Cut Expectations: Analyst