The crypto money market is faced with high volatility due to the US CPI (consumer price index) and PPI (manufacturer price index) to be announced this week. Inflation data, which is higher than expected, may cause a harsh decline of Bitcoin (BTC) and the general crypto market. These critical data will be announced before the Federal Reserve (FED) meeting on March 18-19 and will play a decisive role on the Central Bank’s interest rate decision. The markets closely follow the impact of these data on the Fed’s interest policy.
Crypto market is waiting for critical US CPI data
US inflation figures will be determined by the announcement of CPI and EFE data on March 12th. This development has created great uncertainty and anxiety among crypto investors. According to a survey conducted by Reuters, February US CPI is expected to increase by 0.3 %. Wall Street forecasts predict the annual CPI’s 2.9 %. If an inflation rate is explained above expectations, a significant decrease in the crypto market may be experienced.
“High inflation data may intimidate the market, Bryant Vancronhite, senior portfolio manager of Allspring Global Investments. The market is still waiting for the Fed to intervene. However, unless inflation and inflation expectations are reduced, Fed’s hand will remain tied. ”
How will CPI and PPI data affect the Fed’s interest rate decision?
The Fed’s interest meeting will take place immediately after the announcement of CPI and PPI data. These data will have a significant impact on the decision of the Central Bank on interest rates. According to CME Fedwatch Tool, the Fed is expected to keep interest rates constant at the range of 4.25 %to 4.5 %at the March meeting. However, market expectations foresee an interest rate reduction of approximately 70 basis by the end of the year. If the inflation figures are high, the Fed may keep the Fed rather than lowering interest rates, or a new interest rate hike may be raised.
FED President Jerome Powell is a cautious stance in reducing interest rates. “Our policy is no longer as restrictive as the previous and the economy remains strong. We have no rush to change our policy stance. ”
Can the Bitcoin price rise or will the correction come?
Following the US CPI data announced last February, the crypto market declined to $ 3.1 trillion with a loss of 3.3 %. Bitcoin, on the other hand, lost 3 %of the inflation rate above expectations and fell to $ 94,000. Therefore, it seems likely that a similar sales pressure will be experienced in the crypto market next week. In addition, there were large outlets from Bitcoin ETFs and a total of $ 409 million funds withdrew from the market. In particular, 21shares’ Arkb fund was $ 160 million and Fidelity’s FBTC fund saw $ 154.9 million output.
However, analyst Crypto Caesar considers the current decline trend as a harbinger of a great rise. On the other hand, according to analyst Ali Martinez, 63.13 %of Binance Futures investors have opened a long (Long) position in Bitcoin. This shows that many investors are optimistic about the future rise of Bitcoin. As a result, inflation data to be announced this week may cause high volatility in the crypto market. The direction of the market will be shaped depending on how the US economy will follow inflationary pressures.
