Delayed US Inflation Report Drives Crypto Market Volatility
Traders are bracing for Friday’s delayed US inflation report after a 24-day government shutdown halted its release. Economists forecast CPI data showing a 0.4% monthly increase and a 3.1% annual rise, the first above 3% this year. A reading above 3.1% could dampen expectations for Fed rate cuts, while a print at or below 3% may boost liquidity in risk assets. Despite higher inflation forecasts, CME futures still price in a 98.3% chance of a rate cut next week, given labour-market weakness.
The crypto market has already priced in the delay. In the past 24 hours, total market capitalization rose by 1.8%, led by Bitcoin briefly surging above $111,000. Traders anticipate short-term volatility around the release of the US inflation report but remain cautiously optimistic that Fed rate cuts and improved liquidity will support further upside. Market participants should prepare for volatility and consider positioning for potential rallies in cryptocurrencies ahead of Fed policy decisions.
Bullish
The delayed US inflation report creates a window for increased crypto market activity. Short-term volatility is expected around the CPI data release, as readings above 3.1% could temper Fed rate cut expectations, while a result at or below 3% may trigger a surge in risk asset liquidity. CME futures still price in a high probability of Fed rate cuts, underpinning bullish sentiment for cryptocurrencies. Historical patterns show that below-3% inflation prints often coincide with strong crypto rallies, and the current pricing of potential rate easing supports further upside. Traders are likely to position for a rally both before and after the report, capitalizing on volatility and anticipating improved liquidity.