Crypto investors are getting ready for the CPI data that will be released today. All eyes will be on BTC, SHIB and ETH. cryptocoin.com We have compiled the details of the CPI report to be announced today for you.
CPI report will be announced today
Last month’s crypto market rally was in part caused by optimistic investors with positive sentiments in the broader financial market. Crypto isn’t the only market picking up, stocks have also seen a boost, with major indices showing gains. However, economic troubles seemed to have spread since the beginning of February.
Stocks in Europe have traded lower in the past few days as news about the UK’s zero percent growth swept the market.
In Asia, stocks slumped for a second one-week decline on Monday as investors worried about the possibility of further tightening by the US central bank and its impact on crypto and the US economy.
Meanwhile, the Bureau of Labor Statistics is scheduled to release its CPI report at 4:30 p.m. today. According to economists surveyed by Dow Jones, inflation will increase by 0.4% per month and 6.2% annually.
CPI figures and its impact on crypto
Analyzing price changes for goods and services, the Consumer Price Index report has the potential to affect the cryptocurrency market in several ways.
A higher-than-expected CPI figure may prompt investors to seek other investments, such as fiat currencies or cryptocurrencies that are not tied to central banks.
Second, a lower-than-anticipated CPI figure could be counterproductive, leading to less interest in cryptocurrencies. It is worth noting, however, that the CPI report is just one of several potential market moves in the BTC space. Market weather, regulatory changes, and general economic trends can all have an impact on the price of cryptocurrencies.
Monthly CPI expected to increase
Last month may have been a great time for alternative investments, both stocks and crypto, but macroeconomic indicators show a very different story. Economists expect the US monthly CPI to rise to 0.5% in January from 0.1% last December. However, this is quite inconsistent with the annual CPI, which is expected to fall to 6.2% from 6.5% in December.
This expected increase in monthly CPI figures is a sign that economists are pessimistic about the short- and medium-term improvements in the economy. This pessimism is somewhat reflected in the recent market action of major cryptocurrencies like Bitcoin and Ethereum.
US Federal Reserve Chairman Michelle Bowman also said recently that the Fed still expects a further increase as inflation is still above the 2% target. With this aggressive policy and lower consumer spending signaled by lower Producer Price Index (PPI) figures, investors may be pessimistic about the same market rally that started in January.
What awaits BTC, ETH, SHIB?
Strong volatility could enter the broader financial market if MoM CPI data is as expected or lower. Overall, this week will be crucial for both stocks and crypto as the two markets are strongly correlated.
With the current market crunch the cryptocurrency is experiencing, we could see lower lows as poorly performing Bitcoin and Ethereum drag down investor confidence.
While the markets are waiting anxiously, the only hope of investors is that macros will improve in the coming weeks. However, the latest news suggests that a soft recession is likely, with some analysts expecting a short and shallow recession.
While this is good news for crypto, it cannot offset the short- and medium-term consequences of the worsening macro. Investors and traders should wait for more troubles to come as the market remains pessimistic. Still, anything can happen while waiting for the result of the CPI report.
How will BTC react to the CPI?
Core inflation is expected to rise 0.4% monthly and 5.5% year-over-year (down from 5.7%). The fear is that a high inflation rate in January prompted the US Federal Reserve to raise interest rates higher than expected and to keep interest rates at this level for longer.
If the CPI is below expectations, Bitcoin and cryptocurrencies will see a more or less increase depending on the size of the CPI. Any disappointment with a higher-than-expected CPI could trigger selling as the Fed gains more room to raise rates. Market participants make predictions. However, the market consensus is 6.2%, while the Cleveland Fed estimates 6.48%, Kalshi 6.6% and Truflation 5.8%.
Among large banks, estimates also differ sharply in some cases. Bank of America estimates 6.1%, while Goldman Sachs estimates 6.4%. Credit Suisse, JP Morgan and Wells Fargo are in the middle with 6.2%. Here’s JP Morgan’s plan for the S&P 500, where Bitcoin has been highly correlated over the past 18 months: The base case (65% probability) sees January CPI between 6.0% and 6.3%, which is the S&P 500. It can also trigger an upward movement of 1.5% to 2%.
The second most likely case, according to JP Morgan, is a 6.4% or 6.5% CPI, which could lower the S&P 500 from 0.75% to 1.5%. According to the bank giant, the other two scenarios (above 6.5% and below 6.0%) only have a marginal probability of 5%. The most likely scenario for Bitcoin could trigger an even bigger uptrend as the crypto market is more volatile.
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