Crypto markets are deep red on Monday, with industry leader bitcoin sliding lower ahead of a packed week of economic data.
At press time, bitcoin traded near $68,200, down nearly 3% in 24 hours, with XRP ether , record much greater losses. Losses hit 85 of the top 100 tokens by market cap, with privacy coins like monero and zcash a decrease of 10% and 8% respectively.
Smart contract tokens also bled, with the CoinDesk Smart Contract Platform Select Capped Index down nearly 6%, pushing its year-to-date decline to 28%.
The market weakness looks particularly disappointing against the backdrop of weak US consumer price index data released last week, which kept hopes of interest rate cuts alive.
CPI growth eased to 2.4% year-on-year in January from 2.7% in December, official data showed, reinforcing expectations for at least two 25 basis point rate cuts by the Fed this year. This resulted in the 10-year US Treasury yield falling to 4.05%, the lowest since early December. Bitcoin rallied from nearly $66,800 on Friday to over $70,000 over the weekend, but failed to establish a foothold there.
Vikram Subburaj, chief executive of the India-based regulated Giottus exchange, said selective demand is why rallies are struggling to last.
“Risk appetite remained selective and macro cross-currents kept traders defensive. In derivatives, the market continues to behave as if it is ‘de-leveraging first, ask questions later.’ Rallies have struggled to hold and dips are only being selectively bought near obvious levels,” he said in an email to CoinDesk.
Macro heavy weak
A packed week of macro data lies ahead, with traders looking to the minutes of the January Fed meeting and the release of the Fed’s preferred inflation gauge, the core personal consumption expenditures (PCE) price index, for new positioning signals.
“PCE inflation, the Fed’s preferred measure, will be closely watched for confirmation that price pressures are easing, especially after CPI showed only a gradual decline in inflation and inflation remains above the 2% target,” Dessislava Laneva, Nexo dispatch analyst, said in an email.
“Markets will assess both the monthly momentum and the year-over-year trend for implications for the policy path.” Laneva added.
In traditional markets, Mark Nash of Jupiter Asset Management, a high-profile yen bear, has turned bullish, predicting an 8-9% yen appreciation, especially against the Swiss franc.
The yen and bitcoin have hit a record positive correlation in recent months, making any yen strength a key catalyst for bitcoin bulls.
