Markets Surge After Data Shows US Inflation Cooling

Crypto prices rallied Thursday in tandem with the stock market after consumer prices dropped to 6.5% from 7.1% in November, according to the U.S. Bureau of Labor Statistics.

Bitcoin, already having a good week, jumped 8.4% jump in the last 24 hours, according to The Defiant Terminal. ETH, BNB, and XRP, the top non-pegged digital assets after Bitcoin, also rallied — ETH is up 7.1%, BNB is up 3.2%, and XRP 1.5%.

GBTC Discount Shrinks

The uptick continued Friday, with Ether and other DeFi names posting modest gains.

Despite the ongoing battle between crypto exchange Gemini and Digital Currency Group (DCG), GBTC has curiously surged even more than Bitcoin — the beleaguered security, which represents a share in an underlying pool of Bitcoin, jumped almost 12% on the day.

GBTC is a publicly-traded investment fund issued by Grayscale, a subsidiary of DCG. Because of the structure of the investment vehicle, the security doesn’t trade one-to-one with the underlying Bitcoin it represents.

Instead, GTBC floats at a premium or discount relative to the underlying BTC based on market demand for its shares — GBTC’s discount to its Net Asset Value (NAV) hit an all-time high of nearly 50% in December.

GBTC Discount to NAV

Notably, traditional stock markets are also up on the CPI news, indicating that crypto continues to be just another risk-on trade in the current macro environment and is not meaningfully differentiated from equities.

Annualized inflation in the United States hit a high of 9.1% in June 2022 and has been edging lower since.

Lido Leads DeFi Higher

The DeFi tokens of the top protocols in terms of total value locked (TVL) have also taken a leg up. Leading the charge is Lido, one of a red hot set of liquid staking protocols — LDO is up a whopping 19.4% on the day.

Next Fed Meeting

The Fed’s next meeting will take place on Feb. 1, and the CME Group’s FedWatch tool indicates a 92.2% chance of a 25 basis point hike.

The Bureau of Labor statistics’ next release of CPI data, which will reference January prices, will come out on Feb. 14.