Bitcoin exposed to US inflation figures
Cryptocurrencies have been able to recover to a certain extent from the lows they reached at the end of last year with some tokens continuing to see an uptrend. Sentiment among crypto traders has been improving during the last few months while the US banking confidence crisis has helped boost capital flows toward digital assets.
Concerns about the solidity of the banking sector could still be a positive factor for bitcoin in particular as talk of a credit crunch continues to increase. Weaker liquidity could lead to more difficulties for banks and companies alike.
Tightening credit conditions could affect the Federal Reserve’s perspectives on monetary policy and could push for a review of the current trend in interest rate hikes. While markets are overwhelmingly pricing in a rise in rates at the Fed’s next meeting some investors maintain hopes for a pause.
In this regard, the US inflation figures due tomorrow could strongly affect investors’ expectations and could lead to strong volatility in particular if figures miss estimates. Inflation is expected to soften and a lower-than-expected figure could fuel gains for bitcoin and other major cryptocurrencies.
In comparison with other digital assets, bitcoin has been growing its market share and has seen a sharp rise in market dominance since the beginning of the year and is moving toward levels not seen since early 2021. The loss of confidence in other cryptocurrencies including stablecoins and the difficulties of some crypto firms could continue to fuel a move toward bitcoin and away from assets that are deemed potentially riskier.
Ethereum was able to maintain a relatively stable share in the total crypto market capitalization over the last two years and could find support in the coming software update. The change should give a clearer view for investors interested in the asset as coins stored in Ethereum’s staking system will be unlocked. At the same time, the update could open the door to a potential selling trend which could lead to significant volatility.
