Bitcoin traded lower as investors unpacked Wednesday’s announcement from the U.S. Federal Reserve that it could raise interest rates by late 2023. Assets deemed to be risky like stocks and crypto also appear to be weighed down by lingering concerns that the Fed may wind down its bond-buying program sooner than expected.

Some analysts, however, expect bitcoin to remain resilient if inflation continues to rise, which could lead to outperformance versus traditional markets.

In a newsletter published on Wednesday, EQUOS, a digital asset financial services company, described the initial down move across risk assets as a “knee-jerk reaction.”

“Bitcoin and stocks will likely correlate through the turbulence, before reality hits: Inflation is likely to see bitcoin outperform stocks,”

The chart below shows the 90-day correlation between bitcoin and the S&P 500 has risen so far this year.“Past bitcoin bull market cycles have tended to occur alongside year-over-year increases in the core CPI (consumer price index)…. and bear market cycles have come as CPI has rolled over,” David Grider, head of digital assets research at research firm Fundstrat, wrote in a newsletter published on Wednesday.

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