Top Expectations from the Crypto Market After US CPI?

Key Insights:

• The crypto market eagerly awaits the upcoming US CPI inflation figures.
• Bitcoin price has lost more than 2% as investors took a pause ahead of the release.
• The US CPI for July is expected to come in at 2.8%.

The crypto market has started the week on a high note, but lost its momentum today, as evidenced by the retreat of top players in the segment. Bitcoin price has lost more than 2%, after soaring to $122,000 on Monday.

Notably, the ongoing plunge has sparked discussions among traders over the potential reason behind the dip. According to many market pundits, it could be due to the soaring tensions over the upcoming US Consumer Price Index (CPI) inflation data that is scheduled for later today.

Meanwhile, the US Federal Reserve closely evaluates the CPI figures for cues on the inflationary pressure on the economy. Having said that, the upcoming data by the Labor Department could set the future trajectory of the broader financial sector, let alone the crypto market.

So, here we explore the expectations of the US CPI figures and how they may impact the digital assets space.

Crypto Market Awaits US CPI: Here’s What to Expect

The broader financial enthusiasts are eagerly waiting for the upcoming US CPI inflation figure, as it might cement bets over the potential future stance of the US Fed. Notably, the crypto market also took a hit today, indicating that investors are taking a pause ahead of the inflation data release.

Meanwhile, according to Wall Street Estimates, the US CPI for July is expected to come in at 0.2%, down from 0.3% recorded in the prior month. However, the CPI on a year-over-year (YoY) basis is likely to spike to 2.8%, as compared to 2.7% in June.

On the other hand, the Core CPI, excluding the food and energy prices, might increase to 0.3% from the 0.2% figure of the prior month. Simultaneously, the Core CPI on a YoY basis is expected to come in at 3.1% in July, up from 2.9% in June.

Bitcoin price Slips, but Ethereum Stays in Green

Bitcoin has touched $122k over the weekend, reversing its previous losses. However, the gains were short-lived, with a pullback observed ahead of the CPI release.

BTC price today has lost its momentum, losing around 2% and slipping to $119k during writing.

On the other hand, Ethereum price has stayed in the green, holding above the $4,300 level. This marks its highest price in over four years, indicating that the investors are shifting focus towards the altcoin segment.

How Can US CPI Impact Crypto Market Sentiment?

As discussions are soaring over the upcoming US CPI, QCP Group has shared key insights. According to the QCP report, a softer-than-expected print could cement market expectations for a September Fed rate cut.

This, if happens, could potentially send the crypto prices to new all-time highs. Notably, CME FedWatch Tool showed that the odds of a September rate cut is at 84% currently.

On the other hand, a hotter CPI print could stall the rally, dampening the broader financial market sentiment. In other words, if the CPI exceeds Wall Street expectations, it could trigger a selloff in the crypto market alongside broader markets.

The report noted that traders are hedging event risk, with increased demand for front-end $115,000–$118,000 BTC puts to protect against a downside surprise.

Meanwhile, Matrixport’s report notes that Bitcoin is breaking out of its triangle pattern. As long as it holds above $116,817, this remains a tradable breakout with the trend skewed higher, the report showed.

Notably, it also said that a hotter-than-expected CPI could challenge expectations for two Fed rate cuts this year. Despite that, it noted that patient investors are likely to be rewarded over the course of the year due to continued capital inflows into crypto.

Amid this, QCP Group said that the institutional demand and spot ETF flows will be key to watch for the potential future movements of Bitcoin.