Bullish CPI inflation reading might become source of volatility spike on cryptocurrency market
Upcoming inflation data from the US has always been an important factor on the cryptocurrency market, as it greatly affects the sentiment of retail investors in general. According to JP Morgan, CPI inflation below 6.9% will cause a rally in the Tradefy markets, which will certainly have a positive impact on crypto.
According to the market consensus, the most likely outcome for YoY inflation today is 7.2%, which is far above the aforementioned 6.9%. However, historical analysis shows that market consensus has almost never been correct, and the financial regulator often makes unexpected moves that either push the market upward or downward.
Ahead of the data release, investors are pushing the soft landing narrative as a series of rate hikes pushed both traditional and crypto markets to their multi-month lows as investors actively liquidated their portfolios. and are raising funds towards stable investment solutions.
In addition to the strong bullish outcome, JPMorgan covered possible scenarios in which markets would plunge further down. At a 7.8% reading, the index might lose more than 4.5% of its value, causing a local catastrophe on markets. The cryptocurrency market would react accordingly, with most assets losing more than 5%. Luckily, the probability of such a high reading is only at 5%.
The most likely outcome is 7.2%-7.4%, which would cause a minor rally in the market and have a positive impact on the digital asset market. But this certainly won’t lead to a rally as most market participants have already priced it in.
At press time, Bitcoin and the crypto market in general remain calm, with the average volatility on the market today in the 3%-4% range.
