Cryptocurrencies rally, stocks trade sideways as traders speculate interest rate decision 

Bitcoin was up around 2% over the past 24 hours at time of publication, according to data from Coinbase, to hit its highest price since late April


atdigit/Shutterstock modified by Blockworks


Bitcoin and ether extended their rallies Friday, a sign pointing to sustained higher prices ahead, according to some analysts. 

Bitcoin (BTC) was up around 2% over the past 24 hours at time of publication to trade around $67,000, according to data from Coinbase. The largest cryptocurrency is now up more than 10% over the past seven days to hit the highest price since late April. Researchers from Matrixport attribute the run to favorable macroeconomic conditions. 

US inflation eased slightly in April, according to the latest consumer price index report released Wednesday, which showed prices were up 0.3% last month, slightly below expectations of a 0.4% increase. 

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“The trigger for the post-CPI pump this week was a marginally lower-than-expected inflation number that catapulted [b]itcoin +7% higher,” Matrixport analysts wrote in a note Friday. “However, the buying occurred relatively [gradually], indicating a persistent buyer in the market instead of a fast re-pricing, as we usually see when economic data causes a huge surprise.” 

Ether (ETH) also posted a rally this week, gaining close to 7%, per Coinbase. The cryptocurrency is now trading back above the $3,000 level after hovering around $2,900 last week. 

US equities on Friday were relatively flat after a week of returns. The S&P 500 is up 1.2% over the past five trading days while the Nasdaq Composite has gained 1.8%. 

Wednesday’s inflation print was enough to assure markets that the Federal Reserve will refrain from raising interest rates in June. Traders still widely anticipate that central bankers will opt to hold rates steady, according to Fed fund futures data from CME Group. Now that an increase is off the table, markets can breathe a sigh of relief, Matrixport analysts said. 

Even after three Fed officials — Cleveland Fed President Loretta Mester, New York Fed President John Williams and Richmond Fed President Thomas Barkin — on Thursday in separate speeches insisted that rate cuts are a long way off, traders were undeterred. 

“Interestingly, the total number of expected cuts has not moved — CME futures are still pricing in two before December,” Noelle Acheson, author of the Crypto is Macro Now newsletter, said. “Rather, it’s the timing that is in question, with a slight increase in hopes the first comes in July and 70% odds it comes in or before September.”

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