Bitcoin price stumbles amid investors’ aversion to risk assets, but there is a silver lining

cointelegraph.com:

The U.S. stock market approaches a crucial turning point as uncertainty over inflation rises after hotter-than-expected economic data released in February. Despite mounting investor worries, the economy is showing signs of resilience that could protect against a significant downside move. 

The escalating risk-off sentiment in the market is also creating volatility for Bitcoin (BTC). The leading crypto asset, which has had a strong correlation with the U.S. stock market, moved oppositely to the stock market in February. The correction between BTC and Nasdaq turned negative for the first time in two years. However, with the crypto bulls pausing at the $25,200 level, the risks of a downturn alongside stocks are increasing.

While there’s certainly a reason to maintain caution until the release of new economic data and the United States Federal Reserve meeting in March, some indicators suggest that the worst could still be over in terms of new market lows.

The biggest worries of the current bear cycle, which began in 2022, have been decade-high inflation. In January, the Consumer Price Inflation (CPI) level came in hotter than expected, with a 0.2% increase versus the previous month.

There are some additional signs that inflation may remain sticky. The housing sector inflation, which commands more than 40% of the weightage in CPI calculation, has shown no sign of a downturn.

It appears that the market is slipping back into the 2022 trend where increasing inflation corresponds to higher Fed rate hikes and poor liquidity conditions. The market’s expectation of a 50 basis point rate hike in the upcoming March 22 meeting has increased from single-digit percentages to 30%. Fed President Neel Kashkari also raised concerns that there is