The crypto market had a bullish session on Saturday, but regulatory risk and Fed fears will continue to be headwinds limiting short-term gains. The US Securities and Exchange Commission recently took a tough stance against US crypto exchange Kraken, putting the broader cryptocurrency industry under pressure. A movement that caused double-digit losses for several crypto assets.
Bitcoin fell below $22,000 for the first price in three weeks amid this grim news, and the cryptocurrency market capitalization declined by more than $40 billion. To add fuel to the fire, the CPI, which tracks the rate of change in US inflation over time, is expected to be released on February 14.
Alex Krüger, an economist and trader, claims that Ethereum (ETH) and Bitcoin (BTC) may have additional downside potential, but a new crypto rally is near. Krüger claimed that the drop in cryptocurrency prices was a logical reaction to the shutdown of Kraken staking services by the US Securities and Exchange Commission (SEC). But according to his forecast, the cryptocurrency markets could recover in the coming days.
“Quick views of the crypto market. Not adding size yet. I think the next bull run starts with the CPI [consumer price index] or end of month BTC and ETH still have round levels below to run over. Nor stressed by the market. See this as a healthy setback. Activate full bearish only if CPI exceeds by 0.2%”.
The CPI is a frequently watched statistic because traders interpret the new data as a signal of what the Federal Reserve will do next to combat inflation. The Fed may decide to postpone its aggressive interest rate hikes in response to a CPI report that is below consensus expectations, which is generally interpreted as a bullish indicator.
