Bitcoin Rallies as Hot US Retail Sales Stoke Recession Fears

U.S. retail sales rose 3% in Jan. 2023 to $697 billion, beating analysts’ 2% estimates and exceeding December sales by 4.1% as healthy demand and CPI point to rising inflation.

Rising retail sales suggest healthy demand for electronics sales, which rose 3.5%, and food and drink, which was up 7.2%. Without accounting for the volatile car and gasoline sectors, retail spending rose 2.6%.

Bitcoin Breaks Away From Stock Market Amid Recession Fears

Healthy demand for non-essentials could drive additional spending and inflate prices, especially in the presence of a strong labor market with decades-high employment levels. 

Monthly U.S. Retail Sales | Source: Trading Economics

Yesterday’s January CPI report revealed that core CPI, excluding food and energy costs, rose to 0.4% last month. This number complicated the inflation narrative, which suggested that disinflation in other sectors of the economy pointed to the success of the Fed’s tightening policy. 

Now, with higher retail sales and higher CPI, the Federal Reserve will likely increase interest rates to above 5% at its March 2023 Open Markets Committee meeting.

After yesterday’s CPI numbers, stock markets were choppy, with the Dow Jones Industrial Average closing 156 points, the S&P 500 remaining completely flat, while the Nasdaq close five-tenths of a percent after initial losses. After the sales numbers were released, the Dow Jones Industrial Average slipped 135 points, while the S&P 500 dropped 4%. The tech-heavy Nasdaq fell 0.2%.

Breaking correlation with the stock markets, Bitcoin dipped below $22,000 after the CPI numbers before rallying to an intraday high of around $22,275.

BTC/USD Daily Trading Chart | Source: TradingView

Today’s retail sales figures saw the asset rise by roughly 4% on the day to change hands at approximately $22,660. 

Consumers Will Spend Until Inflation Bites, Says Analyst

The pivot from e-commerce to physical stores and increased travel in the wake of the Omicron Covid-19 variant has fueled spending, said Dana Telsey, CEO of the Telsey Advisory Group and research analyst for the retail industry. She noted that discretionary spending would moderate due to inflation, as prices for necessities eat into the incomes of average American consumers.

Macquarie Global Interest Rates and Currencies Strategist Thierry Wizman told Bloomberg that positive retail numbers are fluctuations, not trends, and the markets are misinterpreting them. 

According to Wizman, consumers spent in October and November 2022 because they fear that inflation will devalue their money, and any boon in January does not necessarily indicate consumer confidence that a recession will be avoided.

A recent poll suggested that half of Americans are in a worse financial position than a year ago, the highest proportion since 2009.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

Bookmark (0)
ClosePlease loginn

Related Posts

Bitcoin: The Best Performing Asset Class in Q1 2023

Bitcoin set for its best trading quarter in nearly 2-years.
The top cryptocurrency vastly outpaces stocks performance.
BTC is well placed for more gains in Q2 2023.

Bookmark (0)
ClosePlease loginn

USDC Supply Shrinks by $10 Billion in March, But Hits 6-Month High on Smart Contracts

USDC supply declined by $10 billion in March following its exposure to the US banking crisis.
However, the stablecoin use on smart contracts reached a six-month high of 42.08%.
Tether USDT is now the dominant stablecoin, accounting for over 60% of the market.

Bookmark (0)
ClosePlease loginn

Bittrex Quits US, Cites Unfavorable Regulatory Environment

Crypto exchange Bittrex said it was leaving the United States because of the regulatory environment.
The crypto company had had previous skirmishes with financial regulator in the country.
Crypto stakeholders have warned that the US regulatory landscape would force many firms out of the country.

Bookmark (0)
ClosePlease loginn

Solana overcomes FTX fiasco — SOL price gains 100% in Q1

The cryptocurrency market may have overreacted to Solana’s FTX links and its tainted boss, Sam Bankman-Fried.

Bookmark (0)
ClosePlease loginn

Elon Musk requests dismissal of $258B Dogecoin lawsuit: Report

The plaintiff’s brought up Musk’s Saturday Night Live appearance in 2021, where he portrayed “a fictitious financial expert” and called Dogecoin “a hustle,” resulting in a steep price decline minutes later.

Bookmark (0)
ClosePlease loginn

Here’s how the crypto industry is using artificial intelligence

The rise of artificial intelligence, though in its early stages, has found use cases in crypto through countless projects.

Bookmark (0)
ClosePlease loginn

Leave a Reply

Your email address will not be published. Required fields are marked *