Bitcoin edges higher after dismal February for risk assets as investors assess rate outlook and new China data
- Bitcoin advanced on Wednesday, extending gains for 2023.
- The cryptocurrency traded above $23,000 as March kicked off.
Bitcoin pushed higher Wednesday, sustaining its advance alongside other risk assets after the strongest official manufacturing print in a decade out of China kickstarted trading in March.
The world's most valuable cryptocurrency was up 2.4% to $23,704.10 after rising as much as 3.4%. The move built on February's gain of about 1%, a more modest showing after zooming up roughly 41% in January.
The gain comes after the February shock of a higher-than-expected reading of the Personal Consumption Expenditures data, the Federal Reserve's preferred inflation gauge, which showed that prices remain stubbornly high. The data prompted a reassessment of the outlook for interest rates after markets had been betting on the US central bank to soon pivot from aggressive policy.
The coin on Wednesday was gaining ground on notably strong manufacturing data out of China.
"Many investors may be skeptical of the accuracy of Chinese data, but its stronger-than-expected February PMI animated the animal spirits and bolstered risk-taking appetites," Marc Chandler, managing director at Bannockburn Global Forex, in a note to clients Wednesday.
China's National Bureau of Statistics said its manufacturing activity index rose to 52.46 in February, the highest reading since April 2012, according to Bloomberg. It outstripped expectations of 50.5. Services activity at 56.3 was above expectations of 55.0.
"Not one to miss out on a bump in risk appetite, bitcoin [was] trading more than 2% higher," during Wednesday's session, wrote Oanda senior analyst Craig Erlam in a note.
"It appears to have consolidated around late-February lows in recent days after failing to break key resistance – $24,500-$25,500 – in the middle of the month. That could be a sign of weakness, at least in the short-term, although ultimately it's hard to imagine that occurring if we do see risk appetite continue to improve," he wrote.
Chinese stocks bounced higher, with the Hang Seng Index soaring more than 4%.
Copper was another risk-on asset gaining ground, up 1.2% at $4.14 per pound on prospects of higher Chinese demand for the metal used for construction projects.
Chandler noted that nearly all emerging market currencies were higher, with China's yuan posting its largest gain of the year and Mexico's peso hitting a new five-year high.
But early gains for US equities lost steam. US-listed Chinese stocks had gained after the data from Beijing but eventually turned lower. EV maker Nio fell more than 4% after the stock earlier resisted the weight of a fourth-quarter earnings miss.
US stocks sagged early Wednesday after February's loss for Wall Street's major indexes. Stock fell last month as bond yields jumped, with investors anticipating a higher-for-longer scenario for interest rates as inflation remains stubbornly high.