The U.S. Bureau of Labor Statistics (BLS) will release the Consumer Price Index (CPI) data on Friday, despite the U.S. government shutdown. Investors are bracing for the U.S. Federal Reserve’s preferred inflation gauge, seeking further cues on whether crypto market could crash again.
How US CPI Estimates by JPMorgan and Other Wall Street Giants
The crypto market now awaits the key Consumer Price Index data later today for further cues on direction as uncertainty and volatility rise amid the U.S. government shutdown. While Fed officials, including Chair Jerome Powell, hinted at a further rate cut this month, the US CPI data print will greatly influence the FOMC’s decision.
Economists expect the monthly CPI to come in at 0.4%, the same as August’s 0.4% print. This would make the annual CPI inflation rise to 3.1%, higher than the 2.9% print last month.
Meanwhile, the core CPI is projected to rise 0.3% month-on-month, the same as in the previous month. The market is projecting the annual core CPI to remain steady at 3.1%.
The Wall Street Journal’s Nick Timiraos said the median of 18 Wall Street giants’ expectations showed the core consumer price index rising 0.30%. Besides, the median estimate for headline CPI is 0.39%, corresponding to 3.1% YoY. Notably, Barclays, BNP Paribas, Citigroup, Deutsche Bank, Morgan Stanley, and Nomura estimated core CPI above 0.40%. JPMorgan estimated monthly headline and core rising 0.30% and 0.39%, respectively.
Bank of America, Barclays, BNP Paribas, Citigroup, Deutsche Bank, Employ America, First Trust, Goldman Sachs, JPMorgan, Moody’s, Morgan Stanley, Nomura, TD Securities, UBS, and Wells Fargo expect the annual CPI to come in at 3.1%.
Is Crypto Market Crash Imminent Ahead of Fed Rate Decision?
The CPI print below the forecast will help fuel the Fed rate cut expectations. As a result, BTC price could reclaim above $112K-$115K and even to $120K amid massive upside momentum. At present, the cooling CPI inflation sentiment has triggered Bitcoin buying sentiment among traders as price rebounds above $110K.
If inflation figures come in line with economists’ projections, BTC price will consolidate between $106K-$110K. The crypto market could witness a crash as selling pressure will continue to persists and focus turn towards Fed rate cut decision.
However, Bitcoin can dip to $102K-$104K level again if the CPI inflation data comes in hot. Broader crypto market crash may happen as expected by derivatives traders.
Experts’ Prediction on Bitcoin, Ethereum, and Possible Crypto Crash
According to the latest report by 10x Research, traders are bracing for short-term volatility in Bitcoin and Ethereum, with option markets signaling caution. Skews have flipped sharply bearish after October’s liquidation, with an increase in put demand and hedging activity.
BTC’s implied volatility still trades above the realized price, rewarding option sellers. Meanwhile, ETH has dropped below its realized price, making its options cheap to buy. 10x Research recommends structured trades shorting BTC and buying longer-period ETH options.
In a post on X, Glassnode highlighted Short-Term Holder NUPL data signaled capitulation, with growing stress among recent buyers. Historically, this type of short-term holder pain has aligned with healthier market recovery.
BTC Short-Term Holder NUPL. Source: GlassnodeAnalyst Ali Martinez pointed out that when Bitcoin broke below the STH realized price historically, it mostly fell under the LTH realized price. The LTH realized price is now sitting at $37,000.
BTC Long/Short-Term On-Chain Cost Basis. Source: Ali MartinezSource: https://coingape.com/expert-warns-more-crypto-bloodbath-ahead-of-cpi-data-tomorrow/
