The U.S. CPI data release can cause crypto markets to either surge or plunge sharply, but it really depends on how the actual inflation numbers compare to market expectations.

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Here’s how it typically plays out:
1. If CPI comes in higher than expected (higher inflation):

It signals rising prices and potentially more aggressive Fed interest rate hikes.

The U.S. dollar often strengthens.

Risk assets like crypto and stocks usually drop sharply because higher rates make borrowing more expensive and reduce appetite for risk.

So, crypto prices are likely to fall.

2. If CPI comes in lower than expected (lower inflation):

It suggests inflation is under control or easing.

The Fed may slow down or pause rate hikes.

This generally boosts risk assets, so stocks and crypto tend to rally.

So, crypto prices are likely to rise.

3. If CPI is close to expectations:

The market reaction might be muted or mixed.

Volatility can still happen as traders adjust positions, but no clear up or down trend may emerge immediately.

In short:

CPI is a trigger, not a guarantee.

To predict market direction, you need to consider:

How much CPI differs from market expectations

The Fed’s stance on interest rates

Overall market sentiment before and after the release