Bitcoin (BTC), IOTA (MIOTA), and XRP Bounce Back Ahead of US Inflation Data

Bitcoin, IOTA, XRP, and other cryptocurrencies recovered on Tuesday as crypto investors reacted to a key US inflation report. BTC rose above $96,000, while IOTA and XRP soared to $0.3513 and $2.70, respectively. The total market cap of all cryptocurrencies increased by 5.2% to reach $3.37 trillion.

Bitcoin, IOTA, XRP, and altcoins await US inflation data

The coins rallied after the US announced the latest producer price index (PPI) data, which fell short of expectations. The headline PPI came in at 0.2%, lower than the median estimate of 0.4%. Core PPI, which excludes the volatile food and energy products, fell from 0.2% to 0.0%.

Bitcoin, IOTA, and XRP will now react to Wednesday’s Consumer Price Index (CPI) data, which will offer more insight into the next Fed action. Economists expect that inflation remained higher in December, a trend that may continue because of the ongoing Los Angeles fires and Trump’s policies.

The headline CPI is expected to come in at 2.9%, the highest level in over eight months. Core inflation will remain at 3.3%, 1.3% higher than the Fed’s target of 2.0%. Hence, if the official figures are in line or higher than the estimates, they will indicate a more hawkish tone by the Fed.

Big bank analysts have begun to scale back their Fed actions. ING Bank now sees the Fed cutting rates two times, down from three, while Bank of America anticipates no cuts this year.

“After the stronger-than-expected December jobs report, we revised our Fed outlook: we no longer expect any additional rate cuts. Inflation is stuck above target, with risks skewed to the upside, activity is strong and the labor market now appears to have stabilized,” the analysts said in a note.

Cryptocurrency prices are known to underperform when the Federal Reserve turns hawkish. This is partly because such a view leads to higher bond yields, and a rotation from risky assets to money market funds. It explains why Bitcoin and other altcoins have pulled back recently, while bond yields have soared to a multi-year high.

Earning season kicks off

Another potential catalyst for Bitcoin and altcoins such as IOTA and XRP is the upcoming earning season, which begins on Wednesday. Some of the most important companies to report their results are Blackrock and big banks like Goldman Sachs and JPMorgan.

Blackrock will be a company to watch as it has emerged as the biggest player in the crypto custody services. A statement by Larry Fink, the CEO, on the cryptocurrencies is likely to influence their prices. There are also chances that more companies will announce their crypto strategy this earning season.

The earnings season will also impact crypto prices, depending on how it goes. If the earnings season is strong, stocks will likely rally, which may drag other risky assets such as cryptocurrencies higher.