The Daily Drip

✅ Top Takeaways

• CPI miss sparks crypto bounce:BTC climbed above $68K, ETH broke back over $2K and SOL jumped more than 8% after January CPI printed 0.2% month‑on‑month and 2.4% year‑on‑year, both softer than expected.
• Rates repriced but not “all‑clear”:Traders now see roughly 61 bps of Fed cuts in 2026 and about a coin‑flip chance of the first move by mid‑summer, a modest easing versus pre‑CPI expectations.
• Narrative shifts toward real‑world use:XRP slid despite Ripple’s tokenization deal with Aviva Investors, and Mike Novogratz argued that crypto’s “age of speculation” is fading in favor of lower‑beta real‑world asset rails.

📰 Crypto Market Summary

Bitcoin rose 4.14% to $68,946, Ethereum jumped 5.56% to $2,054 and Solana surged 8.01% to $84.60 after January CPI came in at 0.2% month‑over‑month and 2.4% year‑over‑year, below consensus expectations. The disinflation print boosted confidence that the Fed can eventually pivot toward easier policy without re‑igniting price pressures.

Interest‑rate markets quickly repriced, with traders now discounting roughly 61 basis points of Fed cuts in 2026 versus 58 bps before the data, and assigning around a 50% probability to the first cut landing in the June–July window. That shift helped risk assets, including crypto, stage a relief rally after weeks of grinding losses.

Under the surface, ETH’s price action remained choppy: the token has repeatedly stalled around the $2,000 line, and yesterday saw the largest wipeout of leveraged ETH longs since 2021, highlighting how tight liquidity and positioning can still produce outsized swings. XRP moved the other way, declining 3.45% to $1.41 despite Ripple announcing a strategic tokenization partnership with Aviva Investors on the XRP Ledger; futures open interest slipped to about $2.26 billion while spot‑ETF flows were roughly flat.

Options desks and macro strategists remain cautious, noting that a clean break below $60,000 in the weeks ahead could still trigger a fresh liquidation wave given the large cluster of downside bets, while banks such as Standard Chartered continue to flag $50,000 as a plausible downside target in scenarios where ETF outflows intensify again.

🌍 Macro & Policy Lens

• January CPI eases pressure: The 0.2% monthly and 2.4% annual readings reinforced the view that inflation is cooling without collapsing growth, giving the Fed more room to cut later this year if conditions allow.
• Cut odds inch higher, not sky‑high: Money‑market pricing now implies a bit more than 60 bps of easing in 2026, up only slightly from pre‑print levels, suggesting investors still expect a cautious Fed rather than a rapid‑fire cutting cycle.
• Equities wobble on AI profit worries: At the same time, tech stocks sold off on concerns that AI spending is outpacing near‑term earnings, with the Nasdaq down just over 2% and crypto briefly tracking that risk‑off tone before the CPI‑driven bounce.

For crypto, the combination of softer inflation and equity volatility keeps macro in the driver’s seat: easier policy supports liquidity, but any renewed growth scare or higher‑for‑longer shift could quickly reverse this week’s gains.

💰 Flows & Market Structure

ETF products recorded about $527,024,164 in net outflows yesterday, underscoring that long‑only vehicles have not yet fully embraced the bounce.

• BTC ETFs: roughly $410,200,000 in redemptions, extending the week’s pattern of persistent selling from spot funds.
• ETH ETFs: around $113,100,000 in outflows, consistent with the heavy liquidation of leveraged longs and repeated rejections near the $2,000 level.
• SOL ETFs: approximately $2,700,000 in net inflows, a small but notable positive that mirrors SOL’s outsized price rebound.
• XRP ETFs: about $6,424,164 in net outflows, a contrast to earlier neutral flows and in line with the token’s weaker price action.

The S&P Cryptocurrency Broad Digital Asset Index fell 2.64% on the day and is now down 26.76% year‑to‑date, highlighting how far the broader market remains from reclaiming early‑January levels even after today’s relief move.

Desks describe a split market: options and perp traders are leaning into short‑term macro trades around CPI and Fed expectations, while ETF investors are still net sellers and selectively favor large‑cap alts over smaller, more speculative names.

📊 Sentiment Dashboard

A strong green candle hasn’t moved the mood much: risk gauges still show extreme fear even as prices bounce.

🔢 Market Performance

• BTC, ETH and SOL logged strong single‑day gains but remain solidly negative year‑to‑date, with SOL still down nearly 32% since December.
• BCH led the move with a double‑digit 24‑hour jump and positive weekly performance, while TRX posted a rare combination of positive daily and weekly returns with minimal YTD drawdown.
• Stablecoins such as USDT continue to trade at $1.00, keeping settlement and liquidity rails stable as traders reposition around macro data and ETF flows.

⚡ Risk & Market Lens

Even with today’s bounce, markets are still working through the hangover of recent liquidations, ETF redemptions and macro‑driven risk‑off moves.

What to watch: whether BTC can build a base above the high‑$60Ks without triggering another wave of forced selling below $60K, how ETH volatility evolves after this week’s large long liquidations, and how quickly institutional narratives shift from “age of speculation” to sustainable real‑world‑asset adoption.

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Disclaimer

This newsletter is for informational and educational purposes only and is not investment advice, solicitation, or an endorsement of any strategy or asset. H2cryptO does not warrant data accuracy or completeness.

Crypto assets are highly volatile; always consult professional advisors, use caution, and comply with local laws before making strategic, financial, or investment decisions.