#CryptoCPIWatch The US CPI (Consumer Price Index) report is always a key factor affecting the Crypto market, due to the relationship between inflation, the Fed's monetary policy, and investment flows. Below are the main points:
Impact of CPI on interest rate policy: When CPI rises higher than forecast, the Fed tends to tighten monetary policy by raising interest rates to control inflation. This strengthens the USD, reducing the appeal of risky assets like Crypto. Conversely, a lower-than-expected CPI may boost expectations for the Fed to lower interest rates, facilitating capital flows into the Crypto market.
Crypto market reaction to CPI
CPI lower than forecast: Often triggers a rally in Bitcoin and other cryptocurrencies, as seen in the case of the November 2022 CPI when BTC price increased despite inflation figures not meeting expectations.
CPI higher than forecast: Leads to sell-off pressure in the Crypto market due to concerns that the Fed will maintain high interest rates, as seen in significant corrections of BTC when US CPI exceeded 3%.
Influence from tariffs and economic context: US tariff hikes (such as during President Trump's administration) may slow the impact on CPI but cause long-term instability, leading investors to turn to Crypto as a "safe haven" asset against inflation risks.
Role of Core CPI: The Core CPI (excluding food and energy) is often closely monitored by the Fed to assess long-term inflation trends. If the Core CPI increases slowly, the Fed may be more flexible in easing policies, supporting the Crypto market.
Conclusion: The US CPI report not only reflects the health of the economy but also serves as an important signal for Crypto investors to predict the Fed's moves. In the context of inflation and global trade instability, Crypto continues to play a role as an investment channel sensitive to monetary policy fluctuations.
