Bitcoin Tuesday’s rally faltered as investors believed a weaker-than-expected U.S. inflation reading was not enough to prompt the Federal Reserve to cut interest rates.
Although still up 3% over 24 hours, the largest cryptocurrency has fallen 0.5% since midnight. Ether (ETH), up 4.7% in 24 hours, also fell 0.5%.
On Polymarket, the perceived likelihood of a rate increase fell from 34% to 6.7% after the data was released. Punters now estimate there’s a 93% chance the Federal Reserve will leave rates unchanged this month, and the CME’s FedWatch shows 30-day federal funds futures indicate just a 14.4% chance of an increase.
“Crypto’s reaction to the latest CPI report shows that the market is becoming more selective in how it interprets macro signals,” Markus Levin, co-founder of XYO, told CoinDesk. “As lower inflation reduces pressure on markets and improves the outlook for risk assets, traders no longer assume that every favorable inflation number will automatically lead to rate cuts or new all-time highs.”
