By Omkar Godbole (All times ET unless indicated otherwise)

A real-time tracker of U.S. inflation is offering good news to crypto bulls as bearish forecasts continue to roll in.

The Truflation index, an independent, real-time blockchain-based tracker of daily changes in the consumer price index (CPI), has dropped below 1% for the first time since at least early 2021. The index has fallen from 2.67% since mid-December, taking it well below the Federal Reserve's 2% inflation target.

So while the official government reading stays 700 basis points above the Fed's target, the real-time level is showing fast disinflation, a scenario that supports the case for quick-fire interest-rate cuts by the bank.

That's good news for liquidity-sensitive assets such as bitcoin BTC$78,937.14, especially since the cryptocurrency is now trading 38% below the record $126,000 price from early October. The Truflation reading also contrasts forecasts of inflation resurgence by some analysts.

"As measured by Truflation, consumer price inflation has dropped to 0.86% on a year-over-year basis, breaking significantly below the 2-3% range in place for the past two years. In our view, inflation could turn negative, contrary to BlackRock and PIMCO forecasts," Cathie Wood, CEO of Ark Invest, said on X.

The good news doesn't stop there. Robin Brooks, a senior fellow at the Brookings Institution, who correctly warned of a worsening fiscal situation for Japan last year, predicted President Donald's Trump's pick for Fed chairman, Kevin Warsh, could cut rates by 100 basis points this year.

Let's see if these things offer relief to the crypto market. As of publication time, BTC is trading little changed around $78,000, with smaller tokens showing some recovery, as evidenced by the 2% gain in the CoinDesk 80 Index over 24 hours. Hyperliquid's HYPE and POL stand out as the only top-100 tokens with gains in excess of 10%.

Analysts remain optimistic about long-term prospects.

"In the near term, positioning in crypto does remain fragile. But structurally, ongoing institutional adoption, expanding use of stablecoins for cross-border settlement, and the rise of tokenized real-world assets should improve crypto market depth and interoperability," Emir Ibrahim, an analyst at digital asset trading firm Zerocap, told CoinDesk in an email.

"Over time, these dynamics are expected to reinforce Bitcoin's debasement hedge characteristics, even if the market is not yet fully pricing that narrative today," Ibrahim added.

In traditional markets, both the dollar index and Treasury yields are buoyant in the wake of Monday's strong manufacturing data. Stay alert!

Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today

What to Watch

For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead".

• Crypto
  • Feb. 3: Ondo Finance ONDO$0.2856 to share an update of its roadmap at the Ondo Summit.
  • Feb. 3: CHZ$0.04334 to share its Chiliz Vision 2030 roadmap.
• Macro
  • Feb. 3 U.S. JOLTs data delayed over partial U.S. government shutdown.
• Earnings (Estimates based on FactSet data)
  • Feb. 3: Galaxy Digital (GLXY), pre-market, -$0.95
  • Feb. 3: PayPal Holdings (PYPL), pre-market, $1.29

Token Events

For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead".

• Governance votes & calls
  • Feb. 3: Lido to host a community call on the Lido V3 mainnet launch.
  • Feb. 3: Axie Infinity to host a Lunacian Lounge.
• Unlocks
  • No major unlocks.
• Token Launches
  • Feb. 3: Conflux (CFX) to be listed on Kraken.
  • Feb. 3: Usualx’s unlock window closes.

Conferences

For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead".

• Day 3 of 4: Web Summit Qatar (Doha, Qatar)
• Feb. 3: Ondo Summit (New York)

Market Movements

• BTC is down 0.1% from 4 p.m. ET Monday at $78,400.52 (24hrs: +0.9%)
• ETH is down 2.03% at $2,292.99 (24hrs: +0.14%)
• CoinDesk 20 is down 0.94% at at 2,278.33 (24hrs: +0.55%)
• Ether CESR Composite Staking Rate is up 3 bps at 3%
• BTC funding rate is at 0% (0.0372% annualized) on Binance

• DXY is unchanged at 97.58
• Gold futures are up 6.13% at $4,938.00
• Silver futures are up 11.81% at $86.10
• Nikkei 225 closed up 3.92% at 54,720.66
• Hang Seng closed up 0.22% at 26,834.77
• FTSE is down 0.05% at 10,336.54
• Euro Stoxx 50 is up 0.56% at 6,041.35
• DJIA closed on Monday up 1.05% at 49,407.66
• S&P 500 closed up 0.54% at 6,976.44
• Nasdaq Composite closed up 0.56% at 23,592.11
• S&P/TSX Composite closed up 0.82% at 32,183.88
• S&P 40 Latin America closed up 0.91% at 3,656.11
• U.S. 10-Year Treasury rate is up 1.2 bps at 4.289%
• E-mini S&P 500 futures are up 0.2% at 7,016.25
• E-mini Nasdaq-100 futures are up 0.51% at 25,981.00
• E-mini Dow Jones Industrial Average Index futures are unchanged at 49,522.00

Bitcoin Stats

• BTC Dominance: 60.08% (0.18%)
• Ether-bitcoin ratio: 0.02919 (-2.09%)
• Hashrate (seven-day moving average): 870 EH/s
• Hashprice (spot): $35.10
• Total fees: 3.42 BTC / $266,100
• CME Futures Open Interest: 113,495 BTC
• BTC priced in gold: 15.8 oz.
• BTC vs gold market cap: 5.22%

Technical Analysis

• The chart shows solana SOL$102.90 price swings in candlestick format since 2022.
• Prices dropped to support at $95.16 idenfitied by the horizontal line connecting the low hit in April last year.
• this support breaks, Solana faces little backing until the mid-$30s. Bulls, therefore, need to hold $95.16 to avoid a deeper crash.

Crypto Equities

• Coinbase Global (COIN): closed on Monday at $187.86 (-3.53%), +0.90% at $189.55 in pre-market
• Circle Internet (CRCL): closed at $58.86 (-7.93%), +1.95% at $60.01
• Galaxy Digital (GLXY): closed at $26.44 (-6.44%), +1.06% at $26.70
• Bullish (BLSH): closed at $28.77 (-4.74%), +2.57% at $29.51
• MARA Holdings (MARA): closed at $9.12 (-4.00%), +0.77% at $9.19
• Riot Platforms (RIOT): closed at $15.32 (-0.97%), +1.31% at $15.52
• Core Scientific (CORZ): closed at $17.87 (-0.67%)
• CleanSpark (CLSK): closed at $11.04 (-6.76%), +1.36% at $11.19
• CoinShares Valkyrie Bitcoin Miners ETF (WGMI): closed at $44.44 (-1.38%)
• Exodus Movement (EXOD): closed at $11.18 (-14.59%), -0.63% at $11.11

Crypto Treasury Companies

• Strategy (MSTR): closed at $139.63 (-6.73%), +1.12% at $141.19
• Strive (ASST): closed at $0.72 (-11.94%), +2.32% at $0.74
• SharpLink Gaming (SBET): closed at $7.79 (-12.27%), +0.77% at $7.85
• Upexi (UPXI): closed at $1.62 (-8.99%), +2.47% at $1.66
• Lite Strategy (LITS): closed at $1.14 (-5.79%)

ETF Flows

Spot BTC ETFs

• Daily net flows: $561.8 million
• Cumulative net flows: $55.55 billion
• Total BTC holdings ~1.28 million

Spot ETH ETFs

• Daily net flows: -$2.9 million
• Cumulative net flows: $12 billion
• Total ETH holdings ~5.9 million

Source: Farside Investors

While You Were Sleeping

• Bitcoin ETFs see cash rush as traders hunt bargains (CoinDesk): Investors poured cash into the U.S.-listed bitcoin ETFs on Monday with total net inflow of $561.8 million, the largest single day of buying since Jan. 14.
• SpaceX, xAI Tie Up, Forming $1.25 Trillion Company (The Wall Street Journal): Elon Musk said SpaceX acquired xAI, a deal that combines his rocket-and-satellite business with his artificial-intelligence startup that is facing steep competition.
• Gold rallies with silver as historic rout lures back dip buyers (Bloomberg): Gold and silver rebounded after a historic collapse from all-time highs. Spot gold was up by 6.2% to near $4,950 an ounce. Silver rose more than 10% to top $87.
• India to ramp up purchases of US oil, arms, aircraft; open some farm access (Reuters): India agreed to buy oil, defense goods and aircraft from the U.S., as President Donald Trump announced a trade deal with India slashing tariffs to 18% from 50% in exchange for halting Russian oil purchases.