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The cryptocurrency market reacted positively to the Wednesday report of the consumer price indicator (CPI) and reduced the esteem of the trade war between the USA and China. The demand for alternative hedging instruments usually weakens in such scenarios, but Bitcoin (BTC) approached USD 109,000, while Ether (ETH) recorded 3% profit, saving above USD 2800.
Although it is too early to call it a trend, the cryptographic market seemed slightly to deviate from established assets. The S&P 500 index gave part of its earlier profits, which were initially run by the US President Donald Trump’s announcement with a recent trade agreement with China.
According to the agreement, both nations will return the tariffs back to the levels observed in February 2025, facilitating tension and removing retaliation taxes. However, the results of the stock market suggest that investors were disappointed, despite the fact that traffic significantly reduced the risk of economic precipitation.
Bitcoin, Ether uses potential liquidity injection
The 2.4% annual inflation rate reported by the American indicator of consumer prices ensured some relief, especially in the context of the growing price fears related to the ongoing global trade war. Usually these changes would escalate trust in action and strengthen the American dollar, but investors are still concerned about the growing debt of the US government.
The American dollar index (DXY) fell to the lowest point in seven weeks, which indicates that investors withdraw from the dollar. This inheritance usually indicates the decreasing confidence in the federal reserve ability to manage economic risk and increased concern for the country’s fiscal trajectory. In response, market participants are realized towards other FIAT main currencies.
On Tuesday, JPmorgan Chase, Jamie Dimon, apparently emphasized the risk that private loans create, an area that can become problematic during economic slowdown. According to CNBC, Dimon believes that the United States is susceptible to recession, especially since employment “slightly falls” and increased inflationary pressure is maintained.
Main economist of RSM Joe Brusules he said Yahoo finances that “we didn’t really see much transition, if at all, from tariffs.” In miniature, the lack of solid economic growth remains the main problem of investors. The longer the US federal reserve maintains current interest rates, the more likely it is that the recession becomes.
According to the CME Fedwatch tool, probabilities based on timely contracts for Fed’s target funds have finally been meaning over the past month. Markets now mean a 73% chance that the rates will be 3.75% or higher until December, compared to 42.5% of the chance a month ago.
Related: Bank of Japan Pivot To QE Bitcoin Rally – Arthur Hayes
Higher interest rates have a double negative impact on the economy because they escalate the costs of emissions and refinancing of debt, both for natural persons, companies or government. In addition, interest rates, which exceed the expected inflation, tend to charge risk assets, because crops with constant income become more attractive.
The initial signs of separation from the stock market suggest that investors are looking for higher phrases among the signs that the US government is prepared to raise the debt ceiling. Therefore, regardless of the prospects of economic growth, cryptocurrencies are perceived as using this environment, because traders expect additional liquidity from central banks.
This article is used for general information purposes and should not be and should not be treated as legal or investment advice. The views, thoughts and opinions expressed here are themselves and do not necessarily reflect or represent the views and opinions of Cointelegraph.
