Bitcoin back below $50k while stocks struggle on poor inflation print 

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Stocks slipped while cryp­tocur­ren­cies were mixed Tues­day morn­ing after the lat­est con­sumer price data showed infla­tion is more per­sis­tent than econ­o­mists had bar­gained for. 

January’s con­sumer price index, which broad­ly mea­sures goods and ser­vices across the coun­try, rose 0.3% from Decem­ber. Prices are up 3.1% year-over-year, accord­ing to data from the US Bureau of Labor Sta­tis­tics. Ana­lysts had called for a 0.2% gain over the month and a 2.9% annu­al increase. 

The S&P 500 and Nas­daq Com­pos­ite index­es had a rocky start Tues­day morn­ing short­ly after the open, los­ing 1.4% and 1.7%, respectively. 

Bit­coin (BTC) lost around 0.4% Tues­day morn­ing in New York after briefly break­ing through $50,000. Ether (ETH) on the oth­er hand was up around 4% at time of pub­li­ca­tion. Ana­lysts say bitcoin’s surge past a key psy­cho­log­i­cal lev­el could be a sign recent head­winds are begin­ning to let up. 

Read more: Bit­coin cross­es $50k as mar­ket momen­tum grows

“The post-ETF sell-off in bit­coin didn’t last very long and a break above $50,000 will be wide­ly viewed as a sig­nif­i­cant mile­stone in its come­back,” Craig Erlam, senior mar­ket ana­lyst at OANDA, said. “Many will now be hop­ing it goes from strength to strength, per­haps buoyed by the halv­ing event in April.”

The lat­est infla­tion print could spell trou­ble for investors bank­ing on an inter­est rate cut from the Fed­er­al Reserve in the com­ing months. Fed Funds futures put the like­li­hood of a March rate decrease at just 9%, and odds of a cut com­ing in May cur­rent­ly sit at 37%, accord­ing to data from CME Group. 

The Fed­er­al Reserve Bank of New York on Mon­day kept its pre­dic­tions for one year and five year infla­tion the same, accord­ing to its Jan­u­ary Sur­vey of Con­sumer Expec­ta­tions (SCE). Cen­tral bankers say one-year prices will remain ele­vat­ed more than desired, at around 3%. 

“Fed Chair Pow­ell often refers to sur­vey-based read­ings of expect­ed future infla­tion, and the SCE is one of the most close­ly watched reports track­ing these expec­ta­tions,” Nicholas Colas, co-founder of Data­Trek Research, said. 

“Medi­um-term infla­tion expec­ta­tions are back to pre-pan­dem­ic lev­els (2.5%), but 1‑year expec­ta­tions are not (3%). This is one more rea­son the Fed needs to see more evi­dence of low­er infla­tion before cut­ting rates; it wants con­sumers to be con­fi­dent that price increas­es are wan­ing,” Colas added. 

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