Bitcoin ETFs ignite; CPI data in spotlight

Bitcoin ETF approval spurs market

The SEC has given the green light to 11 ETFs for bitcoin in the US, opening the door to cryptocurrencies to many new investors who don’t want to take the extra steps involved in buying actual bitcoin.

Bitcoin edged higher following the US Securities and Exchange Commission’s (SEC) approval of Bitcoin exchange-traded funds (ETFs) by major funds such as BlackRock and Fidelity. The decision marks a significant milestone for the cryptocurrency, with trading set to commence later today. However, SEC Chair Gary Gensler's remarks underscoring the agency’s non-endorsement of digital assets drew criticism from prominent investors like Cathie Wood.

Crypto market eyes Ether's potential

Alongside Bitcoin, Ether extended its recent rally, fueled by speculation that it could be the focus of upcoming crypto ETF products. This anticipation is driving investor interest in the broader cryptocurrency market, heralding a new wave of investment products centered around digital assets.

Dollar position ahead of CPI report

The dollar index softened to around 102.2, declining for a second session as traders anticipate the release of key US inflation data. The expected headline inflation rate for December is 3.1%, with core inflation potentially dropping to 3.8%, the lowest since May 2021. These figures are critical in shaping the Federal Reserve's monetary policy outlook, with traders now seeing a 64% probability of a Fed rate cut in March, a decrease from last week’s nearly 90% expectation.

Federal Reserve official John Williams expressed that current monetary policy is sufficiently tight to reduce inflation to the Fed's 2% target. However, more evidence is needed before considering rate cuts. This cautious stance by the Fed is influencing market behavior, particularly leading to a rally in shorter-maturity Treasuries as investors speculate on deeper-than-expected rate cuts.