Bitcoin’s Dance with Inflation: A Comedy of Errors and Gains! 💃📉

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What to know:

By Omkar Godbole (All times ET unless indicated otherwise)

Ah, the crypto market, that fickle mistress, is attempting to regain her composure, with Bitcoin pirouetting above the illustrious $81,000, all while casting a wary glance at tomorrow’s U.S. inflation report. Layer-1 and layer-2 coins lead this ballet of recovery, with gaming tokens joining the fray, as if they were the understudies in this grand performance.

One might say the rebound is a delightful spectacle, emerging amidst the melodrama of “peak fear” on Wall Street—a phenomenon that typically graces the stage at market bottoms. 🎭

In a twist worthy of a Shakespearean plot, the spread between one- and six-month futures tied to the VIX, Wall Street’s so-called fear gauge, has crossed above zero, signaling a rare positive reading. It seems the audience is bracing for greater volatility in the short term than six months hence. Volmex’s Bitcoin volatility index mirrors this inversion, though such antics are more common in the crypto circus.

“Is the worst behind us? It’s impossible to say,” mused Ilan Solot, senior global market strategist at Marex Solutions, in an email to CoinDesk. “However, the risk-reward for entering long positions in U.S. 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.” How delightfully cryptic! 🧐

Meanwhile, the yen, that ever-stoic haven currency, appears to be stretching its bullish positioning, suggesting its rally may soon lose steam, potentially providing a much-needed breath of fresh air to risk assets.

The Truflation U.S. Inflation Index, that daily oracle of inflation, has dipped to 1.35%, extending a decline from February’s high of over 2%. This trend hints at the progress the Federal Reserve is seeking before they consider rate cuts—oh, the suspense!

On Wednesday, the Bureau of Labor Statistics is expected to unveil a month-over-month increase of 0.3% for February. A notable deceleration from January’s rather alarming 0.5%. A soft reading could validate traders’ expectations for rapid rate cuts starting in June, possibly leading to a resurgence of risk-on sentiment. However, 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. How very political! 🎩

Conversely, a hotter-than-expected CPI print could derail recovery prospects, setting the stage for a deeper slide in Bitcoin and the broader crypto market. Some analysts even predict Bitcoin could plummet to $74,000. The drama thickens!

“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, dear reader!

Token Talk

By Shaurya Malwa

  • Grok Coin, a token inspired by, but not officially affiliated with, xAI’s Grok AI, was launched on Base using trading mechanisms from Bankr and Clanker.
  • The token’s AI-controlled wallet reportedly amassed over $200K in fees in the hours after going live. Quite the overachiever, isn’t it? 💰
  • It was further amplified by the official Base account on X, which posted, “icymi, @grok launched a token on Base,” framing it as a futuristic step where “AI is owning wallets, making markets, and generating revenue.” This gave the impression of an endorsement from Base’s leadership. How flattering!
  • The post prompted Base developers like Kawz, the founder of Time.fun, to express frustration over the lack of recognition for their own projects.
  • Calling the GrokCoin post unfair and selective, Kawz noted they’d spent months building an app on Base

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2025-03-11 14:35