US Inflation Data Predicted to Have an Impact on the Crypto Market, Like What?

Liputan6.com, Jakarta The United States is set to release the annual core CPI rate, the annual February PPI rate, one-year inflation rate expectations, and more significant measures of inflation. According to analysts, this can influence crypto market movements.

Following last week's strong rally, the broader cryptocurrency market is currently experiencing a pause. The two largest cryptocurrencies by market value, Bitcoin and Ethereum, have retreated from their highs of USD 70,000 and USD 4,000 respectively. Similar gains were also seen in other altcoins which have recovered strongly over the past week.

The CPI data to be announced on Tuesday will be the centerpiece of this week's economic reports. Forecasts suggest that the core price index may increase by 0.3% month-on-month in February, and by 3.7% year-on-year, indicating the smallest annual increase since April 2021.

Further easing in US prices could strengthen the Fed's narrative of fighting inflation now, despite a decrease in the number of rate cuts expected this year.

Swap pricing may suggest cuts expected at the start of the year of six could fall to three by 2024.

Analyst's View

Last week's US employment data did not change this outlook significantly. Although new job additions were above expectations, the unemployment rate reached its highest level in two years.

These mixed signals currently point to a gradual weakening of the labor market, which is consistent with expectations of a weakening US economy. Popular Morgan Stanley strategist Chris Larkin said the employment report does not necessarily provide a completely clear signal to the Fed.

“However, it also does not contain things that could interfere with plans to reduce interest rates,” said Larkin, quoted from Coinmarketcap, Tuesday (12/3/2024).

According to a report released by on-chain data provider Santiment, Bitcoin and Ethereum showed significant gains last week, outperforming the S&P 500's gains. Bitcoin recorded a 10.0% gain, while Ethereum saw a 14.7% gain. Percentage return of the S&P 500 index.

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