All eyes are on the upcoming release of the US Consumer Price Index (CPI) for June as the crypto market negotiates choppy waters. This highly anticipated economic indicator has the power to change investor sentiment, impacting Federal Reserve policy and potentially global financial markets.
Market variability ahead of CPI announcement
Before the CPI release, there was quite a bit of turbulence in the cryptocurrency market. The most prominent token of blockchain technology, Bitcoin, has been going up and down, in parallel with the optimism and pessimism of investors. Traders and experts alike are keeping a close eye on inflation forecasts, which could affect the Future steps of the Federal Reserve.
Market sentiment and inflation expectations
With forecasts ranging from 3% to 3.2% year-on-year, experts at Investing.com say the consensus among U.S. banks and investment firms is for a modest decline in inflation. But Morgan Stanley’s outlier forecast of a more persistent 3.5% YoY inflation rate suggests potential conflict among financial institutions over the economic outlook.
Well-known expert Jesse Cohen The study highlights the important threshold: anything above 3.5% and you can forget about the rate cut in 2024. This comment underscores the high stakes involved in the CPI data today, when even small deviations can affect market expectations and cause significant changes in the market.
🇺🇸🇺🇸 US JUNE CPI INFLATION ESTIMATES
•TD BANK: 3.0%
•SCOTIABANK: 3.0%•JP MORGAN: 3.1%
•WELLS FARGO: 3.1%
•CITI: 3.1%
•BARCLAYS: 3.1%
•BNP PARIBAS: 3.1%
•NOMURA: 3.1%
•https://t.co/LOppBTC8mR: 3.1%•BANK OF AMERICA: 3.2%
•GOLDMAN SACHS: 3.2%•MORGAN STANLEY: 3.5%… photo.twitter.com/CY7EoNwXaz
— Jesse Cohen (@JesseCohenInv) July 10, 2024
About negative corrections and strong rebounds
The results of the CPI study have implications for the bitcoin industry beyond the conventional financial markets. Historically, the crypto market has been susceptible to macroeconomic data such as inflation rates.
Before previous CPI announcements, there was a trend of negative corrections followed by possible recovery moments depending on actual inflation figures.
The BTCUSD trading pair at $58,253 on the 24-hour chart: TradingView.com
Recent history reflects this: In April, inflation remained at 3.4%; in May, it fell slightly to 3.3%, which is the lowest level since April 2020. Along with a market-wide recovery, this decline was accompanied by a rise in Bitcoin above the $69,000 level shortly after the inflation announcement in June.
It is currently hovering around $58,245Bitcoin’s performance is being closely watched by investors, showing a meager decline of 0.8% over the past 24 hours. Bitcoin has maintained a 1.0% gain over the week despite temporary fluctuations, showing resilience amid market uncertainty.
BTC price in the red zone today. Source: CoinMarketCap
The road ahead
Today’s CPI report will serve as a litmus test for next-gen monetary policy choices, even as recent testimony from Federal Reserve Chairman Jerome Powell points to a positive picture of economic recovery.
At $2.24 trillion, the global cryptocurrency market cap has fallen by just over 1% over the past day, underscoring cautious optimism, though tempered by inflation concerns.
Main image of Wealthway fx, chart from TradingView