The crypto market is awaiting the release of the US Consumer Price Index (CPI) data, which is crucial for understanding the cost of living in the largest economy. The core CPI, excluding volatile food and energy prices, is expected to rise by 0.2% from June and 3.4% since the beginning of the year.
The Fed remains cautious and is awaiting more consistent progress before reducing interest rates. The response of the U.S. Treasury yield curve to the expected soft CPI release is also anticipated to shape market sentiment, including the crypto market.
Federal Reserve Chairman Powell’s remarks suggested that cutting the policy rate would not be appropriate until there is greater confidence that inflation is sustainably heading towards the 2% target. Despite these comments, the market’s expectations for a potential Fed rate cut in September remained unchanged.
The potential for rate cuts generally favors risk assets, including crypto, as lower interest rates make borrowing cheaper and prompt investors to seek higher returns in riskier assets. The potential for Fed monetary easing based on continued inflation decline could increase demand for BTC and other cryptos as investors seek assets offering better returns than traditional savings accounts or low-yield bonds.
On the other hand, higher-than-anticipated inflation might dampen hopes for a rate cut, causing a temporary dip in crypto prices as investors reassess their strategies. Analysts have shared insights into the potential movement of Bitcoin, with one referring to the Wyckoff Reaccumulation Model, which suggests that after a consolidation phase, an asset’s price could surge.
Another analyst noted that Bitcoin recently broke above a crucial resistance level and suggested that for BTC to gain momentum, it must surpass the $60,000 mark. Both analysts highlighted the upcoming CPI data as a critical market mover, suggesting its release could heavily influence Bitcoin’s price action.
Data suggests potential upward movement for Bitcoin, with the $60,000 resistance level acting as a key threshold for momentum. The release of the CPI data is crucial, as positive progress towards the Fed’s inflation target could enhance confidence in a potential rate cut, positively impacting risk assets like BTC.
As always, it’s important to conduct thorough research and consider seeking advice from financial professionals before making any moves in the crypto market.
