#MarketReboud
1. Core Consumer Price Index (Core CPI):
The Core CPI is an economic indicator that measures the change in the prices of goods and services purchased by consumers, but excludes food and energy due to their high volatility.
This makes it a more reliable indicator of underlying inflation trends.
Impact on currencies and crypto:
• If Core CPI increases, it signals persistent inflation. The Federal Reserve might raise interest rates to control it.
This typically strengthens the US Dollar and puts downward pressure on cryptocurrencies like Bitcoin and XRP.
• If Core CPI decreases, it suggests weaker inflation. The Fed might consider lowering interest rates.
This weakens the Dollar and can boost crypto assets as investors seek riskier alternatives.
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2. Federal Reserve’s Balance Sheet:
The Fed’s balance sheet shows the total assets and liabilities held by the US central bank. It includes:
• Treasury securities (government bonds),
• Mortgage-backed securities,
• Loans to banks,
• Reserve balances.
Impact on the market:
• When the Fed expands its balance sheet (by buying assets and injecting liquidity),
it increases money supply and usually leads to bullish momentum for cryptocurrencies and stocks.
• When the Fed reduces its balance sheet (known as Quantitative Tightening - QT),
it withdraws liquidity from markets, often causing bearish pressure on crypto and supporting the Dollar.
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Summary:
• Higher Core CPI + QT (balance sheet reduction) → Stronger Dollar, bearish for crypto.
• Lower Core CPI + Fed expansion → Weaker Dollar, bullish for crypto.