#TradingPsychology

US CPI DATA WILL BE PUBLISHED

TODAY AT 8:30 AM ET.

EXPECTATIONS: 2.6%

HOW IT AFFECTS THE MARKET:

LOWER THAN EXPECTED CPI:

If the CPI data shows that inflation is lower than anticipated, it may indicate that central banks, such as the US Federal Reserve, may ease monetary tightening (for example, pause rate increases or even cut rates). This typically boosts risk assets, including cryptocurrencies, as lower interest rates make borrowing cheaper and reduce the appeal of safe-haven assets like bonds. Investors may pour money into Bitcoin and altcoins, expecting a "risk-on" environment. For example, a softer CPI could weaken the US dollar, further supporting cryptocurrency prices as many cryptocurrencies are valued against it.

HIGHER THAN EXPECTED CPI:

Conversely, if the CPI comes in higher than expected, it suggests persistent inflation, which could lead central banks to raise interest rates or maintain an aggressive stance. Higher rates increase the cost of borrowing and make yield-generating assets, such as bonds, more attractive, often leading to a massive sell-off of riskier assets like stocks and cryptocurrencies. This can cause Bitcoin and other cryptocurrency prices to drop in the short term as investors shift to safer investments.