📊 Ethereum and the CPI: Is a rally or a correction coming?
This Tuesday, the new data for the Consumer Price Index (CPI) in the U.S. will be published, and the crypto market — especially Ethereum. Why does it matter so much?
📈 What could happen this Tuesday?
- If the CPI is HIGHER than expected: It's likely that the markets will interpret this as a sign that inflation remains uncontrolled. This increases the likelihood that the Fed will maintain or even raise interest rates more aggressively. In this scenario, risk assets like cryptocurrencies (including Ethereum) usually suffer, as investors prefer safer assets like bonds. We could see downward pressure on the price of $ETH.
- If the CPI is EQUAL to or LOWER than expected: It would be a very positive signal. It would indicate that inflation is easing. This could lead the Fed to consider a less restrictive monetary policy in the future. This scenario is favorable for risk assets. We could see a positive reaction in the price of $ETH, with investors returning to seek growth opportunities.
Why is the CPI so important?
The CPI measures inflation, that is, the general increase in prices of goods and services. When inflation is high and persistent, central banks (like the U.S. Federal Reserve) tend to take action to control it.
THE REALITY!
Although the euphoria of seeing and the market capitalization increases, the drop prior to the CPI data is almost inevitable; it is a combination of risk management and market psychology. Investors temporarily withdraw from the market, creating selling pressure that causes prices to drop. After the data is published, the market reacts, and in many cases, recovers the movement, but sometimes, if the news is bad enough, the rise slows down.
PS: MAKE YOUR FORECASTS
