Americas Crypto Daybook: Bitcoin Regains Footing Ahead of Trump's Inflation Report

By Omkar Godbole (All times ET unless stated otherwise) The cryptocurrency market is poised to recover, with bitcoin rebounding above $81,000 in anticipation of tomorrow's US inflation report. Generally, the recovery from overnight lows is driven by layer-1 and layer-2 coins, as well as gaming tokens. This rebound occurs amidst signs of 'peak fear' on Wall Street, a phenomenon typically observed at market bottoms. Notably, the spread between one- and six-month futures tied to the VIX, Wall Street's 'fear gauge,' crossed above zero on Monday, signaling a rare positive reading and reflecting expectations for greater short-term volatility. The Volmex Bitcoin volatility index shows a similar inversion, although this is more common in the cryptocurrency market. 'Is the worst behind us? It's impossible to say,' noted Ilan Solot, senior global market strategist at Marex Solutions, in an email to CoinDesk. 'However, the risk-reward for entering long positions in US stocks is improving. The VIX index for volatility is now significantly inverted, meaning near-term contracts are priced higher than long-term ones. This is an important sign of stress, but it can also indicate extremes in sentiment.' Meanwhile, bullish positioning in the yen appears overstretched, suggesting the haven currency's rally may soon lose momentum, potentially providing relief to risk assets in the process. The Truflation US Inflation Index, which offers a daily, real-time measurement of inflation based on data from over 30 sources and 13 million price points, has dropped to 1.35%, extending a decline from February's high of over 2%. This trend suggests progress on inflation that the Federal Reserve is looking for before considering rate cuts. On Wednesday, the Bureau of Labor Statistics is expected to show a month-over-month increase of 0.3% for February. This would be a notable deceleration from January's concerning 0.5%. A soft reading could validate traders' expectations for rapid rate cuts starting in June, possibly leading to renewed risk-on sentiment. However, it's essential to note that Chairman Jerome Powell has indicated the Fed is waiting for clarity on President Trump's policies before making its next move, suggesting that soft CPI data alone might not be enough. On the other hand, a hotter-than-expected CPI print could derail recovery prospects, potentially setting the stage for a deeper slide in bitcoin and the broader cryptocurrency market. Some analysts even predict bitcoin could drop to $74,000. 'A bearish pattern persists on the daily timeframes, indicating a strengthening sell-off after failing to hold above the 200-day moving average. The scenario of a pullback to the $70,000 to $74,000 range still looks most probable,' said Alex Kuptsikevich, senior market analyst at FxPro, in an email to CoinDesk. Stay alert! What to Watch Token Events Conferences Token Talk By Shaurya Malwa Derivatives Positioning Market Movements: Bitcoin Stats: Technical Analysis Crypto Equities ETF Flows Spot BTC ETFs: Spot ETH ETFs Source: Farside Investors Overnight Flows Chart of the Day While You Were Sleeping In the Ether