Bitcoin jumped on Tuesday to levels not seen since last summer, extending its rally for a second day as investors weighed the latest inflation data.
Bitcoin was last higher by 3.39% at $25,144, according to Coin Metrics. Chart analysts had been eyeing $25,200 as a key level to watch. Earlier in the day, it rose to $26,513.27. That is its highest level since June 13, just before its pre-FTX bottom.
Bitcoin is now up 22% since Friday, when regulators shut down Silicon Valley Bank, and has risen 52.1% in 2023. Ether has gained 19.2% since Friday and jumped 43.9% year to date.
"There are two factors driving bitcoin's outperformance right now," said Joel Kruger, market strategist at LMAX Group. "The first is the repricing of Fed expectations, with this repricing inviting a more investor friendly market environment. The second, which could be even more significant, is the recent stress around vulnerabilities in the U.S. banking system."
The CPI data showed an increase of 0.4% in February from January, matching the consensus estimate of economists polled by Dow Jones. So-called core CPI, which removes volatile food and energy prices, showed a monthly increase slightly above economists' expectations, and a year-over-year change in line with expectations.
Cryptocurrency prices have recovered dramatically since late last week, with market sentiment flipping 180 degrees after U.S. regulators backstopped the depositors of Silicon Valley Bank and Signature Bank. This led some investors to speculate that the Fed would be less aggressive in raising interest rates.
Bitcoin's correlation with the Nasdaq is at its lowest level since the early November collapse of FTX, according to crypto data provider Kaiko. Its price is still largely driven by macro data and some analysts expect to see a bigger return to that correlation, even with idiosyncratic events driving much of the action in 2023.