The cryptocurrency market experienced a downturn as major assets dropped just before the release of the U.S. inflation data. The U.S. Consumer Price Index (CPI) report for June is set to be unveiled today at 08:30 ET (12:30 UTC). Analysts from various U.S. banks and investment firms are anticipating a slight decrease in the country’s inflation rate, with estimates ranging between 3% and 3.2%.
Morgan Stanley stands out with a higher estimate of 3.5% year-over-year (YoY) for June CPI, as reported by Jesse Cohen. If the actual inflation rate for June falls around 3.1%, there is a likelihood of a Federal Reserve rate cut in September. However, Cohen warns that any figure above 3.5% would eliminate the possibility of rate cuts in 2024.
The inflation rate in the U.S. dropped from 3.4% in April to 3.3% in May, marking the lowest level since April 2021. This led to a market-wide recovery in the crypto sector, with Bitcoin surpassing $69,000 on the day of the inflation report release. It is a common trend for the cryptocurrency market to experience downward corrections prior to the CPI report, and this was no exception.
As of the latest data, the global cryptocurrency market cap has decreased by 1% over the past 24 hours, currently standing at $2.24 trillion. Bitcoin has also slipped by 2% and is priced around $57,900. The upcoming U.S. inflation report has the potential to influence a bullish trend in the crypto market if it shows a decrease in inflation, and conversely, a negative report could lead to a downturn in the sector.
This dynamic relationship between traditional economic indicators like inflation rates and the cryptocurrency market highlights the increasing interconnectedness of these two financial ecosystems. Investors and traders in the crypto space are closely monitoring the U.S. CPI data release as it could serve as a significant catalyst for market movements in the coming months. The anticipation and reaction of the crypto market to such economic events demonstrate the evolving nature of digital assets as a key player in the global financial landscape.