The crypto could be in for a sideways month as inflation concerns return to center stage. Bitcoin and Ether start the new trading month on a high note – after a relatively flat month – each rising less than 1% on Wednesday. Meanwhile, the stock market extended its slide from the previous session. Their modest gains in February pale in comparison to their strong rise in January, but many investors still see it as a winning month. Bitcoin posted a monthly gain of 0.8% and Ether edged up 2.5%, while all major stock averages posted losses in February. “Bitcoin has benefited from a flight to quality within crypto,” said Callie Cox, US investment analyst at eToro. “If you’re an equity investor, you might see bitcoin as that engine of growth with no obvious cash flow. But if you’re a crypto investor who’s been crushed by a dramatic selloff in an altcoin, bitcoin might be considered like this premier store. value.” “It’s all relative, but from a portfolio strategy perspective, you can’t ignore the inherent risks in crypto,” she added. “We still think bitcoin could struggle in a high inflation, high rate environment.” Bitcoin’s correlation with equities has fallen in 2023. However, Katie Stockton, chart analyst and founder of Fairlead Strategies, told CNBC earlier this week that with the current decline in equities, she expects this correlation comes back. Meanwhile, Rob Ginsberg, technical analyst at Wolfe Research, noted that bitcoin and the US dollar index rose together, although they generally move in opposite directions. “It is likely that we will have to give in. In the short term, our bet is on the decline of the dollar,” he said on Wednesday. “It’s an interesting band to say the least,” he added, noting the rising dollar and rates, deteriorating commodities and volatility in equities. “Even with the recent overbought pullback, the crypto continues to hold on and consolidate.” He also said that while “it feels like the fun is over, the charts say differently”. “We are buyers of this pullback and see it as a healthy response to their recent overbought conditions. If we are right and more potential awaits us in the short term, it is hard to think that the crypto is not a beneficiary. major.” What to watch While industry developments accounted for much of the trade action in February, the Fed’s fight against inflation is still front and center, Kruger said. He cited inflation as well as regulation and institutional adoption – two big price drivers in February – as the main catalysts in March. Bitcoin and ether suffered brief declines of 6% and 8.5%, respectively, after US regulators launched a series of enforcement actions against crypto firms. Long-term investors see the regulations as a positive development ultimately, but they can put pressure on prices in the short term, Kruger said. “These things bring some uncertainty into the equation, and the uncertainty can often be, you know, quite negative,” he said. Cox said she has her eye on major economic reports as well as the Fed’s next policy meeting, which begins March 21. ,” she said. “Investors’ main worry over the past few weeks has been the reappearance of rising inflation and how the Fed will respond to it. We may need to see more evidence that inflation is coming back down to the Fed’s liking before we can resume the rally we saw in January.” Breaking Above $25,000 Although bitcoin held up in February, investors won’t don’t know when to expect a rocket rally.Stockton and Joel Kruger, market strategist at LMAX Group, both emphasized $25,000 as the maximum level to make his gains more meaningful. currently at around $23,400, according to Coin Metrics “While we pushed above this last climb in February, we just couldn’t establish ourselves above it,” he said. “Although we are below $25,200, there is always the possibility that this market will continue to pull back and consolidate and that we may not be ready to see that big breakout just yet. Everything has been constructive and we have well weathered, but we really…need to see a weekly close go above that peak to start feeling really encouraged by the outlook,” he added.