In a recent report, Coinbase emphasizes the significant influence of the macroeconomic environment on cryptocurrency performance. Analysts David Han and David Duong pointed to the rebound in Bitcoin prices following April's softer Consumer Price Index (CPI) print as a clear indication of macroeconomic factors driving the sector.

"Macro continues to be a key driver for crypto performance. The 3.4% year-on-year inflation figure aligns with our out-of-consensus view that we're still within a disinflationary trend, which could bring inflation growth to the mid-two percent range by year-end," stated Han and Duong.

Despite this optimistic outlook, the analysts expressed mixed views on inflation in the United States, particularly due to persistent shelter costs reflected in the latest CPI data released on Wednesday. They also highlighted that the recent stagnation in U.S. retail sales supports the notion that the economy might be approaching its peak.

"While the sticky shelter component of the index remains a concern, the stagnation in retail sales last month reinforces our belief that the economy may be reaching its zenith," the Coinbase analysts commented.

Following the CPI data release, the CME's FedWatch tool now predicts a 29.2% chance of a rate cut at the Federal Open Market Committee's (FOMC) July meeting, and a 49.7% chance at the September meeting. Interest rate traders currently see a 91.3% probability that rates will remain unchanged at the June meeting.

The Coinbase report also notes that the CME's Fed Fund futures are pricing in two rate cuts by the end of the year. "We believe that the two 25 basis point rate cuts priced in by Fed Funds futures starting from September 2024 are appropriate, alongside the cyclical move lower in the multilateral USD index," added the analysts.

Bitcoin, the largest digital asset by market cap, has remained above the $66,000 mark, rising 0.49% in the past 24 hours to trade at $66,441 as of 10:52 a.m. ET, according to The Block's Price Page. However, the GM 30 Index, which represents a selection of the top 30 cryptocurrencies, fell 3.06% to 135.67 during the same period.

On Friday, Bitcoin's price saw a slight increase of 0.45%. Image: The Block.