Key takeaway:
The cryptocurrency market responded positively to today’s Consumer Price Index (CPI) report and reduced prospects of an escalating trade war between the US and China. Demand for alternative hedge instruments typically weakens in such scenarios, yet Bitcoin (BTC) neared $109,000, while Ether (ETH) posted a 3% gain, trading above $2,800.
S&P 500 futures (left) vs. Bitcoin/USD (right). Source: TradingView / Cointelegraph
While it’s too early to call it a trend, the crypto market appeared to slightly diverge from traditional assets. The S&P 500 index gave back part of its earlier gains, which had initially been driven by US President Donald Trump’s announcement of a new trade agreement with China.
According to the deal, both nations will roll tariffs back to levels seen in February 2025, easing tensions and removing retaliatory taxes. However, the stock market’s performance suggests that investors were underwhelmed, even though the move significantly reduced the risk of economic fallout.
Bitcoin, Ether benefit from potential liquidity injection
The 2.4% annual inflation rate reported by the US Consumer Price Index offered some relief, especially in the context of rising price concerns driven by the ongoing global trade war. Usually, these developments would boost confidence in stocks and strengthen the US dollar, but investors are still uneasy about the growing US government debt.
US Dollar Index (DXY). Source: TradingView / Cointelegraph
The US Dollar Index (DXY) fell to its lowest point in seven weeks, indicating that investors are retreating from the dollar. This drop typically points to declining confidence in the Federal Reserve’s capacity to manage economic risks and heightened concern over the country’s fiscal trajectory. In response, market participants are reallocating toward other major fiat currencies.
On Tuesday, JPMorgan Chase CEO Jamie Dimon reportedly highlighted the risks posed by private credit, an area that could become problematic during an economic downturn. According to CNBC, Dimon believes the US remains vulnerable to a recession, particularly as employment “will come…
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