#CryptoCPIWatch Overview of the cryptocurrency market before the release of U.S. inflation data (CPI)
1. What is happening?
Digital markets, especially Bitcoin and altcoins, are experiencing significant volatility in anticipation of the Consumer Price Index (CPI) data in the United States at 3:30 PM Baghdad time. This data directly impacts the Federal Reserve's decisions regarding interest rates, which strongly reflects on the performance of digital currencies.
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Current market performance
Bitcoin (BTC):
Currently trading at around $102,400 after retreating from its recent high of $105,700. This pullback is a result of profit-taking and caution ahead of the data.
Altcoins:
Most experienced declines of up to 7%, except for XRP which rose by more than 4%.
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Inflation data expectations and their potential impact
Expectations:
Annual inflation (CPI) is expected to be 2.3%, compared to 2.4% in March, while core inflation (Core CPI) is expected to be at 2.8%.
Expected market reaction:
If the data comes in below expectations: optimism for interest rate cuts will increase, potentially driving Bitcoin to surpass $106,000 and maybe reach $110,000.
If the data comes in higher than expected: the market may decline due to reduced hopes for interest rate cuts.
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Technical analysis
Relative Strength Index (RSI):
There is a positive divergence, indicating weak selling pressure and the potential for a bullish rebound.
MACD Indicator:
Positive crossover on the weekly timeframe, similar to bullish signals that occurred in October 2024.
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Institutional activity
Institutional investors are still showing strong interest. For example, BlackRock’s IBIT ETF recorded positive cash flows of $15 million on May 12, reflecting ongoing confidence in the digital market.
$BTC
$XRB
