Wall Street Predicts Soft Inflation Reading as Crypto Market Holds Steady

Wall Street giants, including JPMorgan, Bank of America, and Morgan Stanley, have given their forecasts ahead of the January U.S. CPI release tomorrow. Meanwhile, the crypto market continues to trade flat ahead of tomorrow’s macro data, which would impact the Fed rate decision at the March FOMC meeting.

Wall Street Shares January U.S. CPI Forecast

According to data shared by WSJ’s Nick Timiraos, Wall Street giants expect a cool inflation reading, with the median forecast being that the January CPI could come in at 0.26% month-over-month (MoM) and 2.5% year-over-year (YoY). Furthermore, based on the median forecast, these experts expect core inflation to come in hotter, at 0.34% MoM and 2.5% YoY.

Besides the monthly core U.S. CPI median forecast, the other forecasts represent a drop from the December CPI inflation figures. As CoinGape reported, the December CPI came in at 2.7% YoY and 0.3% MoM, while the core data came in at 2.6% YoY and 0.25% MoM.

A soft inflation reading would be positive for the crypto market and could come at a time when Fed officials continue to raise concerns about rising inflation. Following the January FOMC meeting, where they held rates steady, the Committee stated that inflation remains somewhat elevated.

Furthermore, Fed Presidents Beth Hammack and Lorie Logan signaled that they will continue to support a pause in Fed rate cuts for now until they see inflation trending towards their 2% target. As such, this U.S. CPI inflation will undoubtedly be key as market participants continue to weigh how many cuts the Fed is likely to make this year.

Crypto Market Holds Steady Ahead of Inflation Reading

The crypto is trading flat ahead of tomorrow’s inflation reading, with a market cap of around $2.2 trillion. CoinMarketCap data showed that the market cap had climbed about 1% earlier in the day but is now down on the day, following Bitcoin’s drop below $66,000.

The leading crypto is now at risk of a drop below $65,000, trading just above this psychological level. The top altcoins, ETH, SOL, XRP, BNB, and DOGE, are all trading flat, with minimal gains and losses in the last 24 hours.

It is worth noting that Bitcoin climbed above $67,000 yesterday following the release of the January jobs report, which came in strong, further reducing expectations of a rate cut. According to experts, BTC remains at risk of further decline, which could occur if tomorrow’s U.S. CPI comes in hot.

As CoinGape reported, Standard Chartered predicted that Bitcoin could crash to as low as $50,000 before it recovers to new highs. On-chain analytics firm Glassnode also noted a structural weakness in BTC’s price action.