Bitcoin climbs to start a new month as investors assess the trajectory

• Bitcoin advanced on Wednesday, extending gains for 2023.
• The cryptocurrency was trading above $23,000 when March started.
• Bitcoin and other risk assets rose after strong Chinese manufacturing activity data.

Bitcoin pushed higher on Wednesday, maintaining gains along with other risk assets after the strongest official output in a decade from China began trading in March.

The world’s most valuable cryptocurrency was up 2.4% at $23,704.10 after rising as much as 3.4%. The move built on February’s gain of about 1%, a more modest result after zooming up about 41% in January.

The gain comes after the February shock of a higher-than-expected reading in personal consumption expenditure data, the Federal Reserve’s preferred inflation gauge, which showed prices remain stubbornly high. The data led to a reassessment of the outlook for interest rates after markets had been betting that the US central bank would soon pivot from aggressive policy.

The currency on Wednesday gained ground on particularly strong manufacturing data from China.

“Many investors may be skeptical of the accuracy of Chinese data, but its stronger-than-expected February PMI animated animal spirits and strengthened risk appetite,” Marc Chandler, CEO of Bannockburn Global Forex, in a note to clients on Wednesday. .

China’s National Bureau of Statistics said its index of manufacturing activity rose to 52.46 in February, the highest reading since April 2012, according to Bloomberg. It exceeded expectations of 50.5. Service activity of 56.3 was above expectations of 55.0.

“Not one to miss a bump in risk appetite, bitcoin [was] traded more than 2% higher,” during Wednesday’s session, Oanda senior analyst Craig Erlam wrote 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. It could be a sign of weakness, in that least in the short term, although ultimately it is hard to imagine that happening if we see risk appetite continue to improve,” he wrote.

Chinese stocks bounced higher, with the Hang Seng Index rising more than 4%.

Copper was another risk-on asset that gained ground, up 1.2% to $4.14 a pound on prospects of higher Chinese demand for the metal used in construction projects.

Chandler noted that almost all emerging market currencies were higher, with China’s yuan posting its biggest gain of the year and Mexico’s peso hitting a new five-year high.

But early gains for US stocks lost momentum. US-listed Chinese shares had risen 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 loss.

US stocks fell early Wednesday after February’s losses for Wall Street’s major indexes. The stock fell last month as bond yields jumped, with investors anticipating a higher-for-longer scenario for interest rates as inflation remains stubbornly high.