US CPI Data on Tuesday To Influence Crypto Market Movement This Week

This week, the United States will release important inflation metrics, covering the February unadjusted core CPI annual rate, the February PPI annual rate, one-year inflation rate expectations, and more. According to CME, the probability that the FOMC will keep interest rates unchanged on March 20 is a remarkable 97%.

Crypto Market Rally Halts Ahead of US CPI Data Release

After a strong rally last week, the broader cryptocurrency market is taking a pause right now. The two major cryptocurrencies (Bitcoin and Ethereum) have retreated from their respective highs of $70,000 and $4,000 respectively. A similar pullback is seen in other altcoins that rallied strongly last week.

Tuesday's release of US CPI (consumer price index) data will take center stage in this week's economic reports. Projections suggest that the underlying price index could rise 0.3% in February compared to the previous month and 3.7% year-on-year, which would mark the smallest annual increase since April 2021.

Further easing of US prices would reinforce the prevailing disinflation narrative, despite a reduction in the expected number of Federal Reserve rate cuts this year. Swap prices indicate an anticipation of three cuts in 2024, up from six at the beginning of the year.

Last weeks US employment data failed to significantly alter this perspective. Despite exceeding estimates in terms of new job additions, the unemployment rate reached a two-year high. This mixed signal suggests a gradual cooling of the labor market, which, for the moment, aligns with expectations of a soft landing for the US economy.

Chris Larkin, Morgan Stanley E*Trade Strategist, commented"The jobs report didn't necessarily indicate that all was well for the Fed, but it also didn't contain anything that would upset its plan to cut rates."

Are cryptocurrencies entering a major consolidation?

According to insights provided by on-chain data provider Santiment, Bitcoin and Ethereum demonstrated significant gains last week, outperforming the returns of the S&P 500. Bitcoin saw a 10.0% rise, while Ethereum rose 14.7%, in contrast to the modest 0.5%. % return of the S&P 500 index.

Historically, cryptocurrency markets have shown sustained bull markets with minimal correlation to traditional stocks. Traders are closely following this trend and are optimistic about its continuation. The divergence in performance between cryptocurrencies and traditional markets underscores the unique dynamics influencing digital asset valuations, fueling hopes for continued market resilience and growth.

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Bhushan is a financial technology enthusiast and has a keen knack for understanding financial markets. His interest in economics and finance draws his attention to the new emerging markets of Blockchain technology and cryptocurrencies. He is continually in the learning process and stays motivated by sharing the knowledge acquired. In his spare time he reads suspense and fiction novels and sometimes explores his culinary skills.

The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.