By Omkar Godbole (All times ET unless indicated otherwise)
The crypto market is looking to regain poise, with bitcoin bouncing above $81,000 ahead of tomorrow’s U.S. inflation report. Broadly speaking, the recovery from overnight lows is led by layer-1 and layer-2 coins, with gaming tokens also rising.
The rebound comes amid indications of “peak fear” on Wall Street, a dynamic typically observed at market bottoms.
Interestingly, the spread between one- and six-month futures tied to the VIX, Wall Street’s so-called fear gauge, crossed above zero on Monday, signaling a rare positive reading and reflecting expectations for greater volatility in the short-term than six months out. Volmex’s Bitcoin volatility index shows a similar inversion, although that is more common in the crypto market.
“Is the worst behind us? It’s impossible to say,” noted Ilan Solot, senior global market strategist at Marex Solutions, in an email to CoinDesk. “However, the risk-reward for entering long positions in U.S. stocks is improving. The VIX index for volatility is now significantly inverted, meaning near-term contracts are priced higher than long-term ones. This is an important sign of stress, but it can also indicate extremes in sentiment.”
Meanwhile, bullish positioning in the yen appears stretched, suggesting the haven currency’s rally may soon lose steam, potentially providing relief to risk assets in the process.
The Truflation U.S. Inflation Index, which offers a daily, real-time measurement of inflation based on data from over 30 sources and 13 million price points, has dropped to 1.35%, extending a decline from February’s high of over 2%. This trend hints at the progress on inflation the Federal Reserve is looking for before considering rate cuts.
On Wednesday, the Bureau of Labor Statistics is expected to show a month-over-month increase of 0.3% for February. This would be a notable deceleration from January’s concerning 0.5%. A soft reading could validate traders’ expectations for rapid rate cuts starting in June, possibly leading to renewed risk-on sentiment. However, it’s important to note that Chairman Jerome Powell has indicated the Fed is waiting for clarity on President Trump’s policies before making its next move, suggesting that soft CPI data alone might not be enough.
On the other hand, a hotter-than-expected CPI print could derail recovery prospects, potentially setting the stage for a deeper slide in bitcoin and the broader crypto market. Some analysts even predict bitcoin could drop to $74,000.
“A bearish pattern persists on the daily timeframes, indicating a strengthening sell-off after failing to hold above the 200-day moving average. The scenario of a pullback to the $70,000 to $74,000 range still looks most probable,” said Alex Kuptsikevich, senior market analyst at FxPro, in an email to CoinDesk. Stay alert!
What to Watch
Crypto Events:
March 11, 9:00 a.m.: Horizen (ZEN) mainnet network upgrade to version ZEN 5.0.6.
March 11, 10:00 a.m.: U.S. House Financial Services Committee hearing about a federal framework for stablecoins and a CBDC. Livestream link.
March 11: The Bitcoin Policy Institute and Senator Cynthia Lummis co-host the invitation-only one-day “Bitcoin for America” event in Washington.
March 12: Hemi (HEMI) has its mainnet launch.
March 15: Athene Network (ATH) mainnet launch.
March 15: Reploy will close its V1 RAI staking program to new users as it transitions to a fully automated revenue-sharing protocol.
March 17.: CME Group launches Solana (SOL) futures.
March 18: Zano (ZANO) hard fork network upgrade activates “ETH Signature support for off-chain signing and asset operations.”
March 20: Pascal hard fork network upgrade goes live on the BNB Smart Chain (BSC) mainnet.
Macro Events:
March 11, 8:00 a.m.: The Brazilian Institute of Geography and Statistics (IBGE) releases January industrial production data.
Industrial Production MoM Est. 0.4% vs. Prev. -0.3%
Industrial Production YoY Est. 2.2% vs. Prev. 1.6%
March 11, 10:00 a.m.: The U.S. Department of Labor releases January’s JOLTs report.
Job Openings Est. 7.75M vs. Prev. 7.6M
Job Quits Prev. 3.197M
March 12, 4:45 a.m.: European Central Bank President Christine Lagarde gives a speech at the 25th “ECB and Its Watchers” conference in Frankfurt.
March 12, 8:00 a.m.: The Brazilian Institute of Geography and Statistics (IBGE) release February consumer price inflation data.
Inflation Rate MoM Est. 1.3% vs. Prev. 0.16%
Inflation Rate YoY Est. 5% vs. Prev. 4.56%
March 12, 8:30 a.m.: The U.S. Bureau of Labor Statistics (BLS) releases February consumer price inflation data.
Core Inflation Rate MoM Est. 0.3% vs. Prev. 0.4%
Core Inflation Rate YoY Est. 3.2% vs. Prev. 3.3%
Inflation Rate MoM Est. 0.3% vs. Prev. 0.5%
Inflation Rate YoY Est. 2.9% vs. Prev. 3%
March 12, 9:45 a.m.: The Bank of Canada announces its interest rate decision.
Policy Interest Rate Est. 2.75% vs. Prev. 3%
March 12, 12:00 p.m.: Russia’s Federal State Statistics Service releases February consumer price inflation data.
Inflation Rate MoM Est. 0.8% vs. Prev. 1.2%
Inflation Rate YoY Est. 10.1% vs. Prev. 9.9%
Market Movements:
BTC is up 2.87% from 4 p.m. ET Monday at $81,425.03 (24hrs: -0.93%)
ETH is up 2.84% at $1,917.00 (24hrs: -8.65%)
CoinDesk 20 is up 3.05% at 2,531.70 (24hrs: -3.66%)
Ether CESR Composite Staking Rate is up 10 bps at 3.11%
BTC funding rate is at 0.0001% (0.1% annualized) on Binance
DXY is down 0.38% at 103.44
Gold is up 0.66% at $2,911.70/oz
Silver is up 1.12% at $32.49/oz
Nikkei 225 closed -0.64% at 36,793.11
Hang Seng closed unchanged at 23,782.14
FTSE is down 0.25% at 8,578.37
Euro Stoxx 50 is up 0.48% at 5,413.02
DJIA closed on Monday -2.08% at 41,911.71
S&P 500 closed -2.7% at 5,614.56
Nasdaq closed -4% at 17,468.32
S&P/TSX Composite Index closed -1.53% at 24,380.71
S&P 40 Latin America closed -2.73% at 2,297.38
U.S. 10-year Treasury rate is down 4 bps at 4.21%
E-mini S&P 500 futures are down 0.28% at 5636.50
E-mini Nasdaq-100 futures are down 0.41% at 19533.25
E-mini Dow Jones Industrial Average Index futures are down 0.21% at 42,036.00
Technical Analysis
Bitcoin’s RSI has carved out a higher low, hinting at a bullish divergence, or positive shift in momentum. Traders who rely on charts may feel tempted to try out longs as prices are close to the key support of the March 2024 high of $73,757, offering an attractive risk-reward. That, in turn, might see the recovery gather pace.
In Conclusion
The current state of the crypto market presents both opportunities and risks. As investors navigate through these fluctuations, keeping an eye on upcoming inflation data and market sentiment will be crucial for strategic decision-making.
