By Brian Swint

Bitcoin and other cryptocurrencies got a scare with the latest inflation data on Wednesday, but managed to bounce back. Where they go from here could depend on a lot more than just interest rates.

Cryptos largely followed the stock market yesterday, falling in the wake of a hotter-than-expected consumer-price index and then spending the rest of the day recovering. By early Thursday, the price of Bitcoin was down 0.5% over the previous 24 hours at $95,969. It fell as low as $93,000 and rose as high as $98,000 Wednesday.

The inflation numbers were bad for speculative assets because they imply higher interest rates from the Federal Reserve, which may not be able to cut borrowing costs as much as hoped. That increases the attractiveness of other investments such as bonds, whose yields go up with Fed rates.

Traders nevertheless digested the figures and decided they may not be that bad, perhaps helped by reassuring words from Fed Chair Jerome Powell that inflation is still receding. The Nasdaq stock index even finished the day ahead in its biggest intraday comeback since November.

Other digital assets were mixed Thursday. XRP was up 1.4% over 24 hours, while Ethereum, the second-biggest crypto, was up 2.3%. Solana slipped 1.8%, but Cardano added 1.6%.

The bigger picture for crypto remains that President Donald Trump is likely to provide policies that are friendly to the asset class. Bitcoin is still up 40% since Trump won the vote in November. XRP, which has had a long-running battle with regulators, is up 380% since the election.

That's been a boon for companies tied to crypto. Coinbase, one of the biggest exchange platforms, reports earnings after the bell on Thursday. MicroStrategy, whose business model is based on buying Bitcoin, changed its name to Strategy earlier this month, a reflection of its grander ambitions as the largest Bitcoin treasury company.

Write to Brian Swint at brian.swint@barrons.com

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February 13, 2025 05:34 ET (10:34 GMT)

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