Bitcoin volatile as CPI report hits
Bitcoin's value witnessed a roughly 2% climb, reaching $57,900 on Tuesday, before its momentum waned in anticipation of the forthcoming August Consumer Price Index (CPI) figures, as per CoinGecko's records.
This crucial forthcoming announcement, set to be unveiled at 8:30 a.m. ET, is poised to sway the Federal Open Market Committee's (FOMC) upcoming decision concerning interest rate adjustments.
Expectations for August's CPI disclosure suggest a slowing pace of inflation, with predictions of the yearly rate dipping to 2.5% from the previous 2.9%. On a month-to-month basis, a 0.2% increase in consumer prices is forecasted.
A downtrend in inflation closer to the Federal Reserve's (Fed) preferred 2% target would signal that the Fed's measures are hitting their mark, potentially steering the economy towards a 'soft landing'.
The labor market's underperformance has kindled discussions among Fed personalities regarding the urgency for policy tweaks to bolster economic expansion.
Chris Waller among other Fed figures, has hinted at a possible recalibration of the federal funds rate target range, intimating the Fed's readiness to temper its monetary policy.
Given the current sentiment, traders have grown optimistic that the central bank will proceed with interest rate reductions at the forthcoming FOMC congregation, as recent CME FedWatch data indicates. The debate now leans towards the extent of the cut, with a 67/33 split in favor of a 50 basis points reduction over a 25 basis points one.
Conversely, an unforeseen uptick in inflation might leave the financial realm, including the cryptocurrency sector, in a tight spot, potentially rendering any rate cuts unjustifiable.
As per CoinGecko, the broader crypto market is presently under a slight downturn, with both Bitcoin and Ethereum seeing a 1% decline in the past day, valuing at around $56,500 and $2,300 correspondingly.
With the CPI data release on the horizon, other cryptocurrencies have started to show signs of retraction. In the market cap's top 100 cryptocurrency assets, Aave (AAVE) and Internet Computer (ICP) lead with a 24-hour surge of 12% and 10% respectively.
Meanwhile, Dogwifhat (WIF) encountered the steepest drop, plummeting nearly 8%, with other cryptos like Arweave (AR) and Starknet (STRK) also experiencing dips.
Conclusively, the crypto market's total valuation has receded by 1.6% over the last day, now evaluated at $2.08 trillion.
