XRP, Bitcoin Prices Rise. Why the Looming Inflation Report Is Key for Crypto. — Barrons.com

By George GloverXRP and Bitcoin were among the cryptocurrencies rising on Tuesday, as digital-asset investors brace for the crucial inflation report.XRP, which is used to settle and facilitate transactions on Ripple Labs' digital-payments platform, climbed 3.3% to $2.51 in early trading. Bitcoin, the world's largest token by market capitalization, was up 0.9% to $98,198.The cryptocurrencies were rising ahead the January consumer price index report due to be published by the Bureau of Labor Statistics on Wednesday. Economists are forecasting that inflation climbed 2.9% from a year ago last month, according to FactSet.The data could be key for cryptos, given that a higher-than-expected reading would likely slam the door on any Federal Reserve interest-rate cuts this year. Higher borrowing costs tend to drag on Bitcoin and other riskier assets, with investors able to find relatively better yields in places like the bond market."The upcoming U.S. inflation data release is pivotal for the crypto market, with higher-than-expected inflation potentially decreasing the chances of Fed rate cuts and negatively impacting cryptocurrencies," Ryan Lee, chief analyst at Bitget Research, said, adding that inflation coming in above target could spark a short-term selloff for cryptos.Other tokens were also rising early Tuesday. Ethereum gained 2%, Solana climbed 1.6%, and Dogecoin — a so-called meme coin that's been touted by Tesla CEO Elon Musk in the past — was up 4.8% to just under 27 cents.Write to George Glover at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.