Bitcoin is up 6.7% in the last 24 hours, boosted by the ongoing banking crisis in the US and persisting core inflation in the euro area. According to Eurostat, core inflation, i.e., excluding food and energy prices, rose to 5.6% in February from 5.3% in January.

Core Inflation in EU Rose to 5.6% in February Amid Underlying Price Growth

Bitcoin soared almost 6.7% on Friday as new consumer price index (CPI) data showed core inflation in the eurozone remained elevated in February while the turmoil in the banking sector continues. The cryptocurrency stood at $26,735 at the time of writing.

Earlier today, Eurostat reported that eurozone inflation eased slightly to 8.5% from 8.6% a month earlier. Eurostat said that the significant drop in energy costs last month was offset by a price increase in almost all other areas as service costs continued to mount.

Core inflation, which does not include food and energy costs, increased in February, rising to 5.6% from 5.3% in January. The Eurostat report confirmed the preliminary data published earlier in March.

The new CPI print comes a day after the European Central Bank (ECB) hiked interest rates by an additional 50 basis points (bps) to bring down the record-high inflation. But the central bank’s recent projections showed that underlying price growth is proving to be sticky, estimating it will stay above the 2% target through 2025.

While overall inflation is expected to keep declining in the coming months due to falling energy costs, the underlying price growth could continue. For that reason, the decline in core inflation could be prolonged, according to analysts and policymakers.

US Banks’ Fed Borrowing Hits Record $164.8 Billion in 2023

Another factor contributing to Bitcoin’s latest rally is the deepening banking crisis triggered by the collapses of Silicon Valley Bank (SVB) and Signature Bank a week ago. The world’s biggest crypto token has already breached the $26,000 mark this week on concerns over traditional banking and the expected inflation data in the US.

On Thursday, banks borrowed a whopping $164.8 billion from two Federal Reserve backstop facilities this week after coming under severe pressure from recent banking failures. During the discount window, banks borrowed $152.85 billion in the week ended March 15, breaking the previous record of $111 million reached during the global financial crisis in 2008.

Now, investors are anxiously waiting to see how the Fed will respond to clear weaknesses in the banking sector at the upcoming policy meeting. Most economists expect the Fed to deliver a third 25 bps increase this year, though some think it might not hike rates at all, which could bode well for crypto prices.

This article originally appeared on The Tokenist

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