Macro continues to be a key driver for crypto: Coinbase
Quick Take
- The macro environment remains a key driver for crypto performance, evidenced by the rebound in bitcoin prices after April’s softer CPI print, a Coinbase report said.
The macro environment continues to be a key driver for crypto performance, according to a Coinbase report.
Analysts David Han and David Duong cited the rebound in bitcoin prices following the softer CPI print for April as evidence of a macro-led driver in the sector.
"Macro continues to be a key driver for crypto performance. The 3.4% year-on-year inflation figure is consistent with our out-of-consensus view that we’re still operating within a disinflationary trend that could take inflation growth to within the mid-two handle by year-end," Han and Duong said.
Inflation still a concern
However, the analysts still have mixed views on inflation in the U.S., expressing concern about the persistent shelter costs in the CPI data released on Wednesday.
They also noted that last month's stagnation in U.S. retail sales supports the perspective that the economy might be reaching its peak.
"That’s not to say that the sticky shelter portion of the index doesn’t concern us, but the stagnation in retail sales last month contributed to our view that the economy may be peaking," the Coinbase analysts said.
RELATED INDICES
September rate cuts
After Wednesday's CPI print, the CME's FedWatch tool now forecasts a 29.2% chance of a rate cut at July's FOMC meeting and a 49.7% chance at September's meeting. Interest rate traders forecast a 91.3% chance that rates will remain unchanged at June's meeting.
The Coinbase report notes that the CME's Fed Fund futures are pricing two rate cuts by the end of the year. "Taken together, we think that the two 25 bps rate cuts being priced by Fed Funds futures starting from September 2024 seems appropriate, as is the cyclical move lower in the multilateral USD index," the analysts added.
The largest digital asset by market cap has held above the $66,000 mark, having increased 0.49% in the past 24 hours to trade at $66,441 at 10:52 a.m. ET, according to The Block’s Price Page.
The GM 30 Index, representing a selection of the top 30 cryptocurrencies, fell 3.06% to 135.67 in the same period.
The price of bitcoin increased by 0.45% on Friday. Image: The Block.
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