U.S. Inflation Data Will Make or Break Crypto Markets, Here’s Why

The U.S. Bureau of Labor Statistics will release the CPI data for the month of June on the 13th of July. The Consumer Price Index is a monthly data point that reveals the change in prices paid. It is considered an important indicator of inflation. 

Crypto market have responded poorly to CPI data this year, given that rising inflation rates have spurred a series of interest rate hikes by the Federal Reserve.

Why Is CPI Important For Crypto

CPI is an important marker that indicated the current state of inflation in the country. The Federal Reserves respond to rising inflation with an increase in interest rates and Quantitative Tightening policies. 

Recently, the Fed increased the interest rates by 0.75 percentage points, the largest increase since 1994. The increased rates caused a major slump in the crypto markets. Bitcoin witnessed its worst financial quarter in a decade. If the next CPI data shows heavy inflation, it could result in a similar slump. 

Michaël van de Poppe, the CEP of Eight Global, revealed that Bitcoin is currently experiencing downward pressure and faces a crucial support test at around $20.3K. BTC is currently trading at $20, 459 with around a 4% decrease in the last 24 hours. If the fear surrounding the upcoming CPI data looms, BTC prices can experience a major downward movement. 

Bloomberg reported that a majority of surveyed investors revealed that BTC is more likely to fall to $10,000 than reach $30,000. 

What are markets expecting?

Data from Marketwatch shows that general consensus is for a CPI reading of an 8.8% increase in June from last year.  Inflation is currently at its highest level in over 40 years in the United States.

In the days prior, there was a lot of enthusiasm for a price rally in the crypto markets. Michael Burry predicted the Fed to reverse its quantitative tightening policies and data showed that short-sellers were apprehensive of their short positions, expecting a crypto recovery.

However, the upcoming CPI release has made many crypto traders apprehensive. Lark Davis, a major influencer, believes that CPI can ruin the rallying prices as the macros still dictate crypto. Another major influencer, il Capo of Crypto, believes that with the looming CPI, new lows are a matter of time. 

The Fed will reveal its decision on the interest rates on the 27th of July. That will definitely be another date for the crypto community to watch out for.

Nidhish is a technology enthusiast, whose aim is to find elegant technical solutions to solve some of society’s biggest issues. He is a firm believer of decentralization and wants to work on the mainstream adoption of Blockchain. He is also big into almost every popular sports and loves to converse on a wide variety of topics.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.