The U.S. Bureau of Labor Statistics will release July Consumer Price Index (CPI) data for August 10 at 12:30 GMT. The CPI is an indicator of a nation’s inflation levels.
CPI is a measure of the monthly change in the price paid by consumers. The Federal Reserve considers the most recent CPI data to decide interest rates. Economists expect inflation to fall from 9.1 per cent to 8.7 per cent. Monthly growth of 0.2 percent is forecast after a jump of 1.3 percent in June.
The Relation Between Crypto and CPI
The CPI is used as one of the indicators for inflation and the Fed curbs higher inflation rates by hiking the interest rate. Higher rates frequently result in market instability, which includes the cryptocurrency market.
The US inflation rate has been a cause of concern for the crypto community. The CPI for June stood at 9.1 per cent, indicating the highest inflation level in 40 years. Bitcoin suffered its worst financial quarter in a decade, resulting in the crypto market becoming highly volatile.
The CPI was 9.4 percent in July but there was no significant impact on the crypto market. Lark Davis, a crypto influencer, stated that high inflation was already priced in by the time. Many economists thought that the Fed would change its hawkish approach due to concerns about a recession.
However, if the CPI number is still high, the Fed could make another unusually large hike.
Ahead of the reveal
Numerous economists have predicted that CPI would be 8.7 percent. However, Michael J Kramer, founder of Mott Capital, said that according to the predictions by Cleveland Fed, the CPI is to be 8.8 percent. The CPI has always been higher than the estimations by Cleveland Fed since Fall 2021, he said.
Davis expects market volatility ahead of the CPI disclosure. He added that Bitcoin’s daily RSI uptrend is barely hanging on. Bitcoin and Ethereum are both down 5 percent in anticipation of today’s reveal.
