The crypro market is noticing a remarkable selling pressure earlier today, spurred by a surprisingly strong jobs report and an unexpected jump in consumer inflation expectations. While these data points may seem alarming on the surface, they carry a layer of nuance that’s critical to understand
The Numbers: What’s Spooking the Market?
The headline inflation expectation for the next year rose to +3.3% in January from +2.8% in December, marking a significant uptick:
January: +3.3%
December: +2.8%
November: +2.6%
October: +2.7%
This data sent ripples through the markets, as it suggests consumers are bracing for higher inflation—a development that historically pushes rates higher and pressures risk assets like crypto.
But here’s where it gets interesting: these shifts appear to be heavily political rather than fundamentally economic.
A Political Divide in Inflation Expectations
Breaking the numbers down by political affiliation reveals a striking divergence:
Democratic Respondents:
October: +1.5% → January: +4.2%
Republican Respondents:
October: +3.6% → January: +0.1%
This wild flip in inflation expectations aligns perfectly with the Republican victory in the White House and Congress. It’s hard to ignore the political lens shaping these survey responses. The economic fundamentals haven’t shifted dramatically—wages, for instance, remain steady at +3.9% YoY, a level not indicative of wage-driven inflationary pressures.
The Jobs Report: A Double-Edged Sword
The December jobs report added fuel to the fire with a better-than-expected +256k jobs (vs. +165k consensus). While undeniably strong, this data also supports a growing economy, which should be positive for crypto markets in the medium term. The initial knee-jerk reaction is tied to fears of prolonged higher interest rates, but this isn’t necessarily a game-changer.
What’s Next?
Here’s where things stand:
Short-Term Outlook: Bitcoin has already seen a dip below $91,000, and could go a bit lower as the market digests this turbulence. However, this could pave the way for a potential reversal as we approach the January 20th inauguration. Historically, such events tend to bring renewed optimism and liquidity into the market.
Long-Term Perspective: These developments don’t materially alter the broader crypto fundamentals. Bitcoin and other major assets remain in an uptrend, and this correction could present a buying opportunity for those positioned wisely.
Bottom Line
Yes, this is turbulent, but turbulence is a feature, not a bug, in crypto markets. Stay patient, stick to your strategy, and remember: the fundamentals haven’t changed. This dip might feel unsettling, but it’s often during these moments of doubt that the best opportunities emerge.
Let the market shake out the weak hands—your job is to keep a clear head.
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