In response to the August Consumer Price Index (CPI) data, global crypto markets displayed negligible movement. Major cryptocurrencies, the foremost being Bitcoin, remained relatively neutral in the wake of this economic news. With the Federal Reserve’s impending decision regarding rates, the trading markets’ nonchalant response seems less unpredictable and more indicative of a deliberate holding position. This is worth noting as it portrays a clear picture of the market’s stance in light of economic fluctuations and changes.
Crypto Market Unshaken by August CPI
The cryptocurrency markets displayed little to no reaction following the rise in August’s CPI by a margin of 2.9%. The lack of movement held Bitcoin, along with other major tokens, in a predominantly flat position. The total valuation of the crypto market rose by a scant 0.18% to $3.96 trillion, exemplifying a generally neutral investor sentiment.
Currently, the primary focus of traders is shifting towards the upcoming Federal Reserve’s policy decision, which is set for September 17-18. According to market projections, a quarter-point rate cut is the most plausible outcome of this policy decision.
On September 11th, the Bureau of Labor Statistics published numbers indicating an annual rate climb in the Consumer Price Index (CPI) of 2.9%. The rise was led by steady increases in energy and grocery bills, surpassing July’s position of 2.7%.
The Underlying Economy
Concurrently, the core CPI, which dismisses the often-volatile food and energy costs, remained unwavering at 3.1%. The landing of this data occurred amidst a backdrop beset with escalating jobless claims and revised payroll figures. These variables offered a much more complicated and obscured insight into the fundamental economy.
For cryptocurrency traders, the latest CPI report was not a main event. Risk markets considered its emergence as the concluding piece of macroeconomic data staged before the real spectacle: the imminent Federal Open Market Committee’s policy decision.
A Cautious Stance by Crypto Markets to CPI Report
The total crypto market cap saw a marginal rise, registering an increase of 0.18% to reach a total of $3.96 trillion. Interestingly, this movement hides a lack of confidence beneath the surface. Bitcoin’s value remained essentially unchanged, standing at a robust valuation of $114,221, with Ethereum and Ripple experiencing a bit of a slump by more than 0.5% in the past 24 hours.
The Crypto Fear & Greed Index maintained stability at a Neutral 47 even after the data revealed itself. This reading carries far-reaching implications. It represents a market consciously suppressing its emotional response, not willing to fully commit to risk before a clearer monetary policy is determined.
The Market’s Waiting Game Continues
The indicator has remained confined in this neutral territory for the entirety of the week, barely fluctuating from figures of 43 one day ago and 44 in the last week. This level of stability is a stark contrast to last month’s ‘Greed’ mode reading of 62, and the ‘Extreme Greed’ figure of 88, which signified the annual high.
August’s CPI report handed the Federal Reserve a fairly complicated challenge. Rising food prices and shelter costs, along with a 1.9% surge in gasoline after recent drops, are all factors shaping rate expectations leading into the September 17-18 Federal Open Market Committee meeting.
The market currently estimates an 88% possibility of a quarter-point cut, and a less likely 11% chance of a deeper half-point move. Traders, by year-end, are still betting on an overall 75 basis points of easing.
Although the softer labor backdrop has led some to anticipate more aggressive action, enthusiasm is being tempered by inflation data. All these factors together shape the current standstill in the crypto market and will undeniably affect the course of future financial events.
