Crypto markets are in deep red on Monday, with sector leader Bitcoin sliding lower ahead of a busy week of economic data.
At press time, Bitcoin traded near $68,200, down almost 3% over 24 hours, with XRP ether , recording much greater losses. Losses affected 85 of the top 100 tokens by market cap, with privacy coins like monero and zcash down 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 seems particularly disappointing against the backdrop of weak U.S. Consumer Price Index data released last week, which fueled hopes of a Fed rate cut.
CPI growth slowed to 2.4% year-on-year in January from 2.7% in December, official data showed, bolstering expectations of at least two 25 basis point rate cuts by the Fed this year. That sent the yield on the 10-year U.S. Treasury down to 4.05%, its lowest level since early December. Bitcoin rallied from nearly $66,800 on Friday to over $70,000 over the weekend, but failed to gain a foothold there.
Vikram Subburaj, CEO of India-based regulated exchange Giottus, said selective demand is why rallies are struggling to hold up.
“Risk appetite remained selective and macroeconomic currents kept traders on the defensive. In the derivatives space, the market continues to behave as if it is “deleveraging first, asking questions later”. Rallies have struggled to sustain and dips are only bought selectively, near obvious levels,” he said in an email to CoinDesk.
Low heavy macro
A busy week of macroeconomic data lies ahead, with traders eyeing the minutes of the Fed’s January 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 to confirm that price pressures are moderating, particularly after the CPI showed only gradual disinflation and inflation remains above the 2% target,” Nexo analyst Dessislava Ianeva said in an email.
“Markets will assess both monthly momentum and annual trend to determine implications for policy trajectory.” Ianeva added.
In traditional markets, Jupiter Asset Management’s Mark Nash, a high-profile yen bear, has turned bull, forecasting the yen to appreciate by 8-9%, particularly against the Swiss franc.
The yen and bitcoin have reached a record positive correlation in recent months, making the yen’s full strength a key catalyst for bitcoin bulls.
