Bitcoin Surges 5% to $82K as Inflation Data Boosts Crypto

Bitcoin price surged by 5% on Feb. 28, crossing the $82,000 mark as analysts predicted a potential rebound in March. The rally came as the latest US macroeconomic data on inflation met market expectations, providing relief to investors and boosting risk assets, including cryptocurrencies.

The Personal Consumption Expenditures (PCE) index, the Federal Reserve's preferred inflation gauge, came in at 0.3% month-on-month and 2.5% year-on-year in January. This was in line with market expectations and marked the first decline in PCE inflation since September 2024. The US dollar index (DXY) fell from local highs of 107.45, a level not seen in two weeks, as markets sensed relief from the inflation data.

Analysts noted that the PCE and core PCE results were constructive, but interest rate cut expectations remained largely unchanged. Volatility in the market was ramping up, with the latest data from CME Group's FedWatch Tool putting the odds of a rate cut at the Fed's March meeting at just 5.5%.

Julien Bittel, head of macro research at Global Macro Investor, argued that the current market conditions, particularly in the crypto space, were a direct consequence of the tightening of financial conditions in the fourth quarter of last year. He suggested that the "scare" affecting markets would not last much longer, as financial conditions had been easing rapidly over the past two months, setting the stage for a recovery in the data soon.

Bittel noted that Bitcoin's price action at $80,000 reflected the fully tightened conditions, with sentiment extremely bearish and Bitcoin's RSI at its most oversold level since August 2023. He forecasted that the market would see a recovery in the data soon, as financial conditions are always leading.