Bitcoin crosses the $26,000 mark as U.S. inflation dropped to 6% in February.

Bitcoin crosses the $26,000 mark as U.S. inflation dropped to 6% in February.

According to the Bureau of Labor Statistics (BLS), inflation in the United States decreased to 0.4% in February from 0.5% in January. 

In line with expectations, inflation decreased from 6.4% to 6.0% on an annual basis from 6.4% the previous month. 

Contrary to expectations, the core rate of inflation, which excludes expenditures for food and energy, jumped to 0.5% in February from 0.4% in January. As predicted, the core rate for the year-over-year comparison was 5.5% as opposed to 5.6% in January.

In the minutes that followed the revelation, the price of bitcoin (BTC) increased to a nine-month high of $25,484. The largest cryptocurrency in the world by market capitalization continued to rise, reaching $26,373, representing an 18% increase over the previous day.

During the past few days, investors, the government, and the Federal Reserve have had to cope with the potential systemic ramifications of numerous bank collapses, pushing inflation concerns to the background. 

Traders had been placing bets less than a week prior that the Fed will increase the federal funds rate at its March meeting by 50 basis points. After Silicon Valley Bank went under on Friday and Signature Bank closed over the weekend, traders rapidly changed their course and are now only pricing in the slimmest possibility of any rate hike in March and rate decreases by mid-summer.

Bob Ras, co-founder of Sologenic, a blockchain-powered network for tokenizing equities, wrote to CoinDesk in an email, saying that the macro backdrop is changing from one of tightening to one of major relaxing. We're witnessing a noticeable rally in the crypto market because bitcoin and other digital assets "tend to lead the way in terms of predicting these types of macro movements." 

The CPI was declining, and liquidity injections to support the banking sector were having an effect that was comparable to quantitative easing, according to Ras.

"The conditions are ripening for a protracted surge for Bitcoin and other digital assets - and, indeed, these conditions of financial instability and ensuing monetary turmoil are exactly why Bitcoin was founded in the first place," he said.

Article Credit: Coindesk

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