US CPI Data To Set The Tone For Crypto Market?

US CPI Data: Is the crypto market at the cusp of a sharp shift in investor attitude in the weeks to come? Going by the double shocks in the ecosystem of cryptocurrencies in 2022, investors were desperate for a spell of bullish scenario, just like what January 2023 offered. The recent crypto rally not only did price in the adversities from the FTX collapse, it also weighed in the unfavorable macroeconomic sentiment. In what could be a sign of bullish scene in the short term, the crypto market is finally back in sync with the stock markets after it lost the correlation after the FTX disaster in November 2022.

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Inflation Data – An Inflection Point?

Meanwhile, the U.S. Dollar Index (DXY) is largely unchanged in the last five days. The US Futures displayed mixed results on Monday as a result of market anticipation of the US CPI data release on Tuesday. Later in the week, data on the retail sales and jobless claims is also expected to have an impact on the markets. As per market expectations, the data will show inflation in the US in January declined to 6.20% as against 6.50% in December. Hence, volatility in the stock market could drive a sharp reaction in cryptocurrencies as well.

Inflation swaps for January are now pricing in CPI of 6.24%, which is HOTTER than the consensus of 6.2% #cpi #inflation pic.twitter.com/Dde3DNFFzb

— Michael J. Kramer (@MichaelMOTTCM) February 13, 2023

For the Federal Open Market Committee (FOMC) members, the Consumer Price Index (CPI) is of utmost importance in gauging the economy’s health. The CPI index is of even more significance in current scenario, considering the high inflation and a spree of rising interest rates recently. In 2022, the markets have been most volatile whenever the CPI data release was around the corner. Such a scenario is already playing out already in the crypto market, with the amount of Ethereum (ETH) in supply at the lowest in the last one month.

Also Read: XRP News: Over 592 Million XRP Moved: What Are Whales Up To?

Anvesh reports major developments around crypto adoption and trading opportunities. Having been associated with the industry since 2016, he is now a strong advocate of decentralized technologies. Anvesh is currently based in India. Follow Anvesh on Twitter at @BitcoinReddy and reach out to him at [email protected]

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.