Will the US CPI data increase cryptocurrency prices? It may be modest due of regulatory considerations.
FOMC members use the CPI to evaluate the economy. The CPI index is more essential now due to rising inflation and interest rates.
Is the cryptocurrency market on the verge of a significant change in investor sentiment in the coming weeks? Given the two shocks that the cryptocurrency ecosystem experienced in 2022, investors yearned for a period of positive conditions, exactly like what January 2023 provided. In addition to pricing in the negative effects of the FTX collapse, the recent crypto surge also took into account the poor macroeconomic sentiment. The cryptocurrency market is finally back in sync with the stock markets after it lost the correlation after the FTX crisis in November 2022, which might be a hint of a bullish scenario in the near future.
The U.S. Dollar Index (DXY) has been mostly stable over the past five days. As a result of the market's expectation of the release of the US CPI data on Tuesday, the US Futures showed mixed results on Monday. Data on retail sales and unemployment claims are also anticipated to have an impact on the markets later in the week. According to market predictions, the statistics will indicate that US inflation fell to 6.20% in January from 6.50% in December. Consequently, stock market turbulence may also trigger a strong response in the cryptocurrency market.
CPI of 6.24 percent is currently factored into inflation swaps for January, which is HOTTER than the consensus of 6.2 percent.
The Consumer Price Index (CPI) is crucial for Federal Open Market Committee (FOMC) members in assessing the state of the economy. Given the strong inflation rate and recent wave of interest rate increases, the CPI index is even more important in the current environment. The markets had been most erratic in 2022 when the announcement of the CPI data was imminent. A similar scenario is already unfolding on the cryptocurrency market, where the supply of Ethereum (ETH) is at its lowest point in the past month.
