Dollar Remains Stable, Bitcoin Maintains Gains in Anticipation of Expected Spot ETF Approval

The Securities and Exchange Commission is Expected to Imminently Approve Spot Bitcoin Exchange-Traded Funds (ETFs).

A decline in US consumer inflation expectations kept the dollar rally in check on Tuesday as traders reaffirmed their bets for a slew of Federal Reserve rate cuts this year.

In cryptocurrencies, bitcoin held near its strongest level since April 2022 on growing anticipation the Securities and Exchange Commission will imminently approve spot bitcoin exchange-traded funds (ETF).

The New York Fed’s latest Survey of Consumer Expectations showed on Monday that US consumers’ projection of inflation over the short run fell to the lowest level in nearly three years in December.

A reading on US inflation is due later in the week, which will likely provide further clarity on how much room the Fed has to ease rates this year.

“The big story… the catalyst, was the data regarding inflation expectations going forward,” said Kyle Rodda, a senior financial market analyst at Capital.com.

“While it’s still a tight labour market, we’re still seeing those sort of disinflationary impulses in the United States, which again raises the probability that the Fed will have capacity to cut rates fairly soon.”

Futures indicate approximately 135 basis points of easing priced in for the Federal Reserve in 2024, with a 60 percent likelihood of rate cuts beginning in March. Analysts anticipate a soft landing, a lower dollar, and a bull steepening, providing broad support for risk assets. The US dollar index, measuring the currency against six currencies, remained stable at 102.32. The euro rose to $1.0947 from its recent three-week low of $1.0877, while sterling slipped to $1.2737. In Asia, core inflation in Tokyo slowed for the second consecutive month, easing pressure on the Bank of Japan to exit ultra-loose monetary policy. The yen remained stable at 143.90 per dollar. Bitcoin held at $46,713 after reaching a 21-month peak of $47,281 in the previous session. Several investment managers disclosed fees for their proposed spot bitcoin ETFs, signaling potential approval by the US securities regulator this week. Ethereum, the second-largest cryptocurrency, declined 1.4 percent to $2,299.