Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Inflation Data

• Core Inflation MoM: Consensus 0.2%, Actual 0.2%
• Core Inflation YoY: Consensus 2.5%, Actual 2.5%
• Inflation MoM: Consensus 0.3%, Actual 0.3%
• Inflation YoY: Consensus 2.4%, Actual 2.4%

With the conflict erupting in the Middle East, and the 'closure' of the Strait of Hormuz, the price of oil has soared. As a result, market participants are expecting elevated oil prices for the foreseeable future, assuming there isn't a quick reopening of Hormuz, which there doesn't look like to be. Therefore, markets are pricing for higher inflation over the coming month, driven by higher oil prices.

This means that today's report is likely to be looked through as it's February's data (pre-Middle East conflict) and it therefore doesn't give much signal for inflation over the coming months.

What Today's Print Tells Us?

Inflation (particularly YoY figures) were trending lower, and despite today's positive print, inflation has likely bottomed for the coming months, maybe even all of Q3 2026.

Core Inflation YoY

We expect future inflation prints to show a move back to 3.0% and potentially as high as 3.5% by July.

The likely result of this is that Fed rate cuts are pushed out, with the market now only pricing for 1 cut in 2026, but for cuts to continue in 2027. We remain of the view that the Fed will hold rates rather than to raise them (despite what we're seeing with oil prices) and opt to view higher inflation in the medium term as more 'transitory'.

Market Reaction:

Going into the print, oil is recovering off its lows, equities are unchanged, Bond Yields are up, and Crypto has pulled back slightly.

Today's inflation print shouldn't change much of the above, other than to accelerate it i.e., risk assets to pull back further, oil to go higher, and Bond Yields and the Dollar to also go higher.

Our View?

Bitcoin is pulling back from the $71k local high put in on Tuesday. Current price action looks like a bearish retest that's then been rejected. This looks to be the beginning of the move down that potentially sees $65k retested again.

If price moves higher and breaks above $71k, then $74k will likely be tested again, but our view is for the next move to be lower.

Our Base Case: is for Bitcoin to still remain range-bound in the medium term, with the potential to grind lower in the immediate term. Whilst it's possible price can break out of $71k, to then $74k, we're not confident that the backdrop is there for us to warrant risking-on to play a move higher. For now, we remain patient as our base case is that Bitcoin will fill our buy zone ($50k-$63k) in the coming months.

From a framework perspective, the $50k-$63k zone remains where our cost basis models and on-chain data suggest deep value historically. We are not active at current levels and continue to wait for the data to shift.

Cryptonary’s Take:

This inflation print is outdated, but it likely marks a bottom being in for inflation with it likely to move dramatically higher in the coming months. As a result, the Fed is likely to remain on hold at least through Q2, and maybe in most of Q3. This is an unsupportive environment for risk assets and we therefore remain risk-off with our portfolios.

In the medium term, we expect prices to continue chopping between $60k and $74k, and should price move below $63k, we'd look to begin accumulating Bitcoin for the long-term again.

Our base case is that prices will visit the $50k-$63k zone, which is a deep value area for price, and therefore that zone is where we’d expect the risk/reward to shift meaningfully in favour of long-term positioning.