The CPI data to be released next Tuesday should be the most important indicator.

This CPI will directly affect whether the Federal Reserve will lower interest rates. The reasons have been discussed many times; if inflation is low, the Fed may lower interest rates, the dollar will weaken, which would be very beneficial for cryptocurrencies as there will be more money in the market.

There are basically two scenarios:

1. Data is below expectations (good news): This indicates that inflation is controlled, and high-risk, highly volatile coins (such as $SOL ecosystem, RWA concept coins, small layer two ecosystem tokens) will surge first.

2. If the data is similar to expectations, or slightly higher (bad news): Then the cryptocurrency market will likely drop first, and then gradually stabilize.

Speaking of my operational experience, the sudden surge or drop right when the data is released is often caused by algorithmic trading and bots, which can easily be false moves. The real trend usually appears 30 to 90 minutes later, once the movements of U.S. Treasury bonds and the dollar are clear.

Additionally, if the data is good, but the dollar strengthens and Treasury yields rise instead, it indicates that the market has other negative factors, and one should quickly cut losses.