The crypto market is on edge awaiting the release of the US Consumer Price Index (CPI) data for June. This key economic indicator has the potential to impact investor sentiment, Federal Reserve policy, and global financial markets.
Market Volatility Leading Up to CPI Announcement
Prior to the CPI data reveal, the cryptocurrency market experienced significant fluctuations. Bitcoin, the most well-known token powered by blockchain technology, has been fluctuating in response to varying investor sentiments. Traders and experts are closely monitoring inflation predictions that could influence future actions by the Federal Reserve.
Market Sentiment and Inflation Outlook
Forecasts for the inflation rate range from 3% to 3.2% year-over-year. While the consensus among US banks and investment firms leans towards a slight dip in inflation, outlier projections from Morgan Stanley suggest a more persistent inflation rate of 3.5% YoY, indicating differing views within the financial sector.
Expert Jesse Cohen highlighted the significance, stating that any inflation rate exceeding 3.5% could rule out rate cuts in 2024. The impending CPI data release holds immense importance, as even minor deviations could impact market expectations significantly.
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%
•website: 3.1%•BANK OF AMERICA: 3.2%
•GOLDMAN SACHS: 3.2%•MORGAN STANLEY: 3.5%… pic.twitter.com/CY7EoNwXaz
— Jesse Cohen (@JesseCohenInv) July 10, 2024
Impact of CPI Results on the Crypto Market
The outcomes of the CPI data release can influence the bitcoin industry beyond the traditional financial realm. Historical trends have shown negative corrections in the crypto market before potential rebounds based on actual inflation data.
Recent instances have demonstrated this pattern: when inflation held at 3.4% in April and slightly dropped to 3.3% in May, coinciding with a market-wide recovery, Bitcoin surged past $69,000 following the June inflation announcement.
Currently priced at $58,245, Bitcoin has experienced a modest 0.8% decline in the past 24 hours but managed a 1.0% increase throughout the week, showcasing resilience amidst market fluctuations.
Outlook for the Future
The CPI report released today will serve as a barometer for upcoming monetary policy decisions, despite recent positive signals from Federal Reserve Chair Jerome Powell regarding economic recovery.
With a total value of $2.24 trillion, the global crypto market cap has seen a slight 1% decrease in the last day, reflecting cautious optimism tempered by concerns over inflation.
Featured image from Wealthway fx, chart from TradingView
