Crypto markets rally, but Ethereum struggles to keep pace with Bitcoin
ETH price continues to trail far behind Bitcoin’s year-to-date gains even after the crypto market responded positively to today’s CPI print.
On May 15, the cryptocurrency markets saw a 5.5% increase in total capitalization following the release of inflation and retail sales data from the United States. However, Ether (ETH) failed to fully capitalize on this bullish momentum. Ether last closed above $3,000 over five days ago and has underperformed the leading cryptocurrency, Bitcoin (BTC), by 22% since the start of 2024.
Crypto markets responded positively to U.S. consumer price index (CPI) data showing a 3.4% year-over-year rise in April, which aligned with market expectations. However, retail sales data for April, released on May 15, unsettled investors as it indicated stability from the previous month, contrary to economists’ forecasts of a 0.4% increase. This development increased the likelihood of the U.S. Federal Reserve (Fed) implementing measures to stimulate the economy.
Even if the U.S. Fed decides to maintain interest rates above 5.25% for an extended period to control inflation, the central bank may resort to actions such as purchasing government securities to boost the money supply and reducing the discount rate at which banks borrow from the central bank. Essentially, even a hint of continued liquidity provision can shape economic expectations and behaviors.
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Author: Marcel Pechman
