New inflation figures herald big day for crypto

With the new inflation figures out today crypto is likely to have an extremely volatile day.

Uncertainty in inflation

Today at 13:30 GMT the U.S. Consumer Price Index (CPI) data will be published, which is likely to have a significant impact on the U.S. dollar and as a consequence also on the crypto market.

On a yearly basis, analysts are generally expecting CPI to fall to 6.2%, from its previous monthly figure of 6.5%, while core inflation, which takes out food and energy prices, is expected to dip again from 5.7% down to 5.5%.

However, for the first time, inflation is now being measured on a monthly basis, and this has CPI rising from 0.1 previously, up to 0.5 currently. Core inflation using this measure has been revised to remain the same as the December reading. 

This new way of measuring inflation has led to a more than usual degree of uncertainty in the inflation expectations and so markets are likely to be far more nervous than they usually are.

Bitcoin

Bitcoin has begun the day with another red candle, the third such in a row, but taking this into consideration it is still holding up quite well. An important level to watch is the range midpoint at $21,480. Should the price take hold and confirm below this then $20,860 is the next support level.

On the other hand, if there are no surprises in inflation, or if the figures are better than expected, momentum to the upside could be quite strong and bitcoin could perhaps have one more go at piercing the top of its current range at $25,225.

Altcoins

Whatever bitcoin does, altcoins will do it in spades. Altcoin holders have far more risk on their plate, and should the news be bad, altcoins will dump so much harder than bitcoin.

However, many of the alts are sitting at the bottom as far as the Stochastic RSI momentum indicator reveals on the daily time frame. The Total 3 market cap for alts has also nicely touched support at $347 billion and has bounced to $356 billion.

If the news is good then altcoins are pretty much primed to explode upwards. By early afternoon GMT the markets should be able to see which way the trend will go.