US consumer price index (CPI) for June: Bitcoin is facing a crucial moment
US consumer price index (CPI) for June: Bitcoin is facing a crucial moment
US consumer price index (CPI) for June: Bitcoin is facing a crucial moment
The publication of the highly expected data on the US consumer price index (CPI) for June at 8:30 a.m. EST becomes a crucial moment for Bitcoin (BTC) market. The market participants are looking forward to the effects of the CPI numbers on the price development of BTC, in particular in view of the continuing inflation concerns and examining the next steps of the Federal Reserve.
According to the expectations, a decline in the headline of 4.0 % in the previous month is expected to decrease to 3.1 % for the CPI numbers. The monthly value should increase from 0.1 % to 0.3 %. In the core consumer price index (Kern-VPI), which excludes food and energy prices and is considered a reliable indicator of core inflation, an annual decrease from 5.3 % is expected to 5.0 %. The monthly value should drop from 0.4 % to 0.3 %.
The recent months have caused concern about increasing inflation pressure. Although the overall inflation cools down rapidly and is expected to fall to 3.1 %, the core VPI, which excludes volatile food and energy prices, has gained in importance.
In view of the continued core inflation, the Federal Reserve (FED) has taken a restrictive attitude and expressed concerns about a possible renewed inflation increase. The concern is that inflation has decreased primarily due to the solution of supply chain problems, while the core inflation is still high.experts now expect that the core VPI will gradually decrease to 5.0 % in June after it was 5.3 % in May. This illustrates the current persistence of core inflation. A surprising strong decrease in the Kern-VPI would therefore be extremely positive.
Christopher Inks, renowned dealer and psychology coach, commented on Twitter on the subject: "If the core VPI sinks below 5 %, that would be enormous and you should rather keep your pants. Will the used car sales decrease much more than expected?"
A surprise in core inflation could have a significant impact on the next interest rate decision of the Fed, which will be hit on July 26th at the FOMC session. The CME FEDWATCH tool is currently predicting an interest rate increase by 25 basis points with 92.4 %. This probability could drop massively if the core VPI falls surprisingly down.
JP Morgan has created a schedule for the S&P 500 with regard to today's publication of the consumer price index. According to the bank, the likelihood that the VPI will go back to 3 to 3.2 % is 45 %. In this case, the S&P 500 could increase by 0.5 to 0.75 %. JP Morgan sees the second highest probability in a decline in the total VPI to 2.8 to 2.9 % (25 %), which could lead to an increase in the S&P 500 by 1.5-1.75 %. Exceeding the predicted value (over 3.3 %) is probably only assessed at 20 %.
The Bitcoin market reacts to the CPI data with great attention. A higher than expected VPI indicates increased inflation pressure and could temporarily lead to a decline in BTC. However, if the numbers are in the forecast area, the reaction could be moderate. Investors will monitor the data precisely on signs of persistent inflation, which could possibly lead to a slight decline in the Bitcoin price.
A low VPI value that points to a declining inflation pressure could trigger an upward rally at BTC. Investors could consider this as a positive signal that indicates a continued interest break of the Fed. A lower than expected core VPI value would have the potential to give Bitcoin the urgently needed buoyancy.
At the time of printing, the Bitcoin price broke the average resistance at $ 30,767. The investors are eagerly observing the CPI numbers and their effects on the Bitcoin market.
Source: “Bitcoin is facing a crucial moment with the publication of the US consumer price index (CPI) for June“