Crypto Markets Under Fire How the Latest Hot US CPI Numbers Caused Chaos

Analyzing the Impact of the Latest US CPI on Crypto Markets

So, the latest US Consumer Price Index (CPI) inflation numbers are in, and let’s just say they didn’t exactly set the crypto market on fire. It’s like bringing a popsicle to a volcano and expecting it to melt.

Bitcoin (BTC) is currently trading just below $26,700, playing a little hide-and-seek with its 50-Day Moving Average (DMA). It’s like a game of limbo, except instead of a bamboo stick, we’re using a moving average line. And right now, Bitcoin is bending backward to stay above it. It’s got that negative vibe going, down approximately 0.7% for the day. Ouch!

This bad boy has been on a downward spiral ever since it broke free from its short-term uptrend in mid-September. It’s like a rollercoaster that suddenly decides to take a detour through the haunted house. Spooky!

Now, let’s take a look at these CPI numbers. The headline inflation is running at 0.4% MoM and 3.7% YoY, both 0.1% higher than what the egghead economists predicted. Talk about inflation heating up like a microwave burrito on high settings. But hold on, there’s more.

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The Core CPI, which is the US Federal Reserve’s favorite way to measure underlying price pressures, is behaving itself, exactly as expected. It’s like a well-trained Labrador retriever, always sitting on command. A good boy, indeed. It’s at 0.3% MoM and 4.1% YoY. Not too shabby.

Now, here’s the interesting part. The market actually shrugged off these sizzling CPI numbers. And why, you may ask? Well, it turns out this whole higher-than-expected inflation frenzy was caused by those sneaky rental costs. They decided to take a sudden hike like a mountain goat on a caffeine bender.

But wait, there’s a twist. According to Reuters, those smarty-pants economists believe that these rental cost spikes will soon fizzle out. It’s like a fever that’s about to break, and all the independent surveys are showing a downward trend in rental costs. Looks like those surveys are the psychic fortune-tellers of the economy!

What Does the Latest CPI Data Mean for the Fed?

Ah, the Fed. Our beloved central bank that tries to keep everything in check. But right now, they have their work cut out for them. With core inflation still strutting at 0.3% MoM and 4.1%, the Fed has a long way to go before they can pat themselves on the back.

But here’s the catch. Interest rates are soaring to multi-decade heights, reaching 5.25-5.5%. That’s higher than the Empire State Building! And guess what? It’s more than 1% above inflation. So, the Fed will want to tread lightly when it comes to tightening the monetary leash. They might have already done enough damage.

Just take a look at mortgage rates. They’re dancing at 23-year highs. And credit card borrowing costs? They’re throwing a party at an all-time high. As ING pointed out, it’s like the economy is saying, “You want higher rates? Well, here’s higher everything!”

The big shots at ING don’t believe the Fed will pull off another rate hike by December. They’re like betting against it. And you know what? They have a point. Because the increase in Treasury yields is tightening financial conditions like a vice grip. No need for more rate hikes when things are already tight as a corset.

Speaking of tightening, the US 10-year yield has been on the rise, hitting multi-decade highs near 4.90%. It’s like a free climber reaching the summit, no ropes, just pure adrenaline. Now that’s a sight to behold!

So, what are the odds of another rate hike from the Fed this year? Well, it’s about 31% according to the CME’s Fed Watch Tool. And you know what they say, you win some, you lose some.

What This Means For Crypto

Alright, buckle up because things are about to get interesting. The US Federal Reserve may or may not raise interest rates again. It’s like flipping a coin and hoping it lands on the right side. Uncertainty, my friend, uncertainty.

But here’s what’s more certain than the outcome of a coin toss. The end of the Fed’s tightening cycle is almost here. Get ready to trade your suits for Hawaiian shirts because it’s going to be a party!

Let me take you back to 2019. The Fed hit the brakes on interest rate hikes when they reached around 2.5%. And you know what happened? Bitcoin went on a wild ride, like a convertible blasting down the highway with the top down. It rallied like there’s no tomorrow!

Now, history may not repeat itself exactly, but something tells me the stars are aligning for crypto once again. Picture this, my friend. Next year, financial conditions easing instead of tightening. It’s like paddling downstream with a gentle current, easy peasy.

But wait, there’s more! We’ve got some major catalysts in the pipeline. There’s the upcoming Bitcoin halving, like the Super Bowl halftime show for crypto enthusiasts. And rumor has it, a wave of spot Bitcoin ETFs could be hitting the US market soon. It’s like Christmas morning for crypto investors!

So, my fellow digital asset enthusiasts, keep your eyes peeled, your wallets at the ready, and get ready for the potential Bitcoin rollercoaster ride of a lifetime. Fasten your seatbelts, it’s going to be a wild one!

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