The US Bureau of Labor Statistics will release CPI data for the month of June on July 13. The Consumer Price Index is a monthly data point that reveals changes in prices paid. It is considered an important indicator of inflation.
The crypto market has reacted poorly to CPI data this year, as rising inflation rates spurred a series of interest rate hikes by the Federal Reserve.
Why is IPC important for crypto
The CPI is an important marker that indicates the current state of inflation in the country. The Federal Reserves respond to rising inflation with higher interest rates and quantitative tightening policies.
Recently, the Fed raised interest rates by 0.75 percentage points, the biggest increase since 1994. The rate increase caused a major crash in the crypto markets. Bitcoin had its worst financial quarter in a decade. If the next CPI data shows high inflation, it could lead to 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 a decline of around 4% in the last 24 hours. If fear surrounding the upcoming CPI data looms, BTC prices may see a major bearish move.
Bloomberg reported that a majority of investors surveyed revealed that BTC is more likely to drop to $10,000 than reaching $30,000.
What are the markets waiting for?
Marketwatch data shows that the general consensus is for a CPI reading of an increase of 8.8% in June compared to last year. Inflation is currently at its highest level in over 40 years in the United States.
In the previous days, there was a lot of excitement for a price rally in the crypto markets. Michael Burry predicted that the Fed would reverse its quantitative tightening policies and data showed that short sellers feared their short positions, expecting a rally in the crypto.
However, the upcoming CPI release has made many crypto traders worried. Lark Davis, a major influencer, believes that the CPI can ruin rallying prices because macros always dictate crypto. Another major influencer, Il Capo from Crypto, believes that with the CPI looming, new lows are only a matter of time.
The Fed will release its interest rate decision on July 27. This will definitely be another date to watch for the crypto community.
The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.