Eyes on US Inflation Data for the Crypto Market
The global markets and the cryptocurrency market are both eagerly awaiting the inflation (CPI) data from the US. We have assessed how the expected CPI data and the upcoming data release can affect Bitcoin (BTC) and altcoins.
Eyes on US Inflation Data for the Crypto Market
The US Bureau of Labor Statistics will announce the August Consumer Price Index (CPI) data at 15:30 GMT. It is expected that the annual CPI in the US will increase to 3.6% for the second consecutive month. The headline CPI for July was lower than expected at 3.2%, but it had exceeded 3% in June. Furthermore, the core CPI, which excludes volatile food and energy prices, is expected to decrease from 4.7% to 4.3%.
The announced CPI data will be closely monitored by the markets as it will indicate whether the Federal Reserve (Fed) will continue its tight monetary policy. Last month, the Fed increased interest rates by an additional 25 basis points to sustain the decrease in inflation.
Wall Street predicts that the CPI will meet expectations. JPMorgan expects the CPI to be 3.6% and the core inflation to decrease, resulting in a slight upward momentum in the markets. Goldman Sachs, Bloomberg, Morgan Stanley, RBC, and Wells Fargo also expect the CPI to reach 3.6%. Visa and CIBC, on the other hand, anticipate that the CPI will fall below expectations at 3.5%. Barclays, Nomura, Citi, and HSBC predict that the CPI will exceed expectations and reach 3.7% in August.
Analysts believe that the Fed is likely to end its rate hikes due to a cooling job market and an increase in the unemployment rate last month. The CME FedWatch Tools indicate a 93% chance that the next Federal Open Market Committee (FOMC) meeting on September 20th will not result in a rate hike. However, Wall Street analysts expect the Fed to raise interest rates once again by the end of the year. Despite these expectations, the US Dollar Index (DXY) still remains above 104.50.
How Can Bitcoin and Altcoins React to CPI Data?
A higher than expected CPI indicates a decrease in the prices of Bitcoin and altcoins, while a lower than expected data suggests an increase in prices. The decrease in the core CPI, especially in the face of rising oil prices, is significant.
The price of Bitcoin is showing volatility before the release of CPI data and is trading just below $26,000 at $25,965. Arthur Hayes, the co-founder and former CEO of BitMEX, believes that the Fed’s decision to lower interest rates will rapidly drive the price of the largest cryptocurrency towards $70,000.
On the other hand, the price of the largest altcoin, Ethereum (ETH), has increased by 1% in the last 24 hours and is trading at $1,595. Among the top 25 cryptocurrencies, the crypto that has gained the most value in the last 24 hours is Toncoin (TON). TON’s price has increased by over 13% during the day following the news of the integration of the TON Space crypto wallet with Telegram.
