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The Consumer Price Index for July will be released by the Bureau of Labor Statistics on Wednesday.
The CPI has traditionally been a high-volatility event. However, the upcoming inflation data is of even more crucial importance, owing to the recent recessionary concerns in the US economy.
Unsurprisingly, crypto prices can see significant volatility on Wednesday, depending on the bullish or bearish data. Some experts are already de-risking and closing leveraged trades ahead of the CPI release.
However, low-cap coins and presale tokens still appear to be in high demand.
CPI on Wednesday – Bullish or Bearish for Crypto Prices?
Economists expect that the CPI for July will show a 0.2% increase from June for both the headline figure and the core data.
While this uptick may seem concerning at first glance, experts remain confident that inflation levels are within the Federal Reserve’s control. In particular, the annual CPI metrics continue to rise at the slowest pace since 2021.
As long as the CPI comes in line with the market expectations, it is not likely to derail the Federal Reserve’s plan to cut interest rates in September.
However, a lower-than-expected CPI could spark recessionary concerns once again. Indeed, the weak jobs report and unemployment rate for July was one of the key factors behind the broad-based crash in global financial markets. The Bitcoin price traded as low as $49,000 in the aftermath.
Consequently, crypto prices could decline, following both lower-than-expected or higher-than-expected CPI data. However, the former could be bullish for the crypto market in the long term as it could increase the size of the Fed’s September rate cut.
The CME FedWatch is currently showing nearly split odds between a 25 bps and 50 bps rate cut in September.
However, a lower-than-expected CPI could tilt the odds in favour of a 50 bps rate cut, a decidedly bullish scenario for risk assets such as crypto and meme coins.
In such a scenario, the Bitcoin price could test the support at $49k, followed by a massive rally to a new all-time high.
Investors will also closely watch the ETH/BTC trading pair. It appears to have formed a local bottom at 0.043 after Jump Trading stopped selling its Ethereum holdings. A bullish CPI data could spark a breakout above 0.05, paving the way for an altcoin bull rally.
$ETH is doing well.
The weekly has closed above 0.043 BTC and Jump Trading is done selling Ethereum.
I'm expecting a slow upward grind with a constant inflow for Ethereum.
Crucial level to break: 0.05 BTC pic.twitter.com/gKb3HlHUUW
— Michaël van de Poppe (@CryptoMichNL) August 12, 2024
Low-Caps and Presale Tokens In High Demand
A 50 bps rate cut is extremely bullish for low-cap gems, considering the fresh capital that would enter the crypto market in its aftermath.
Smart money investors appear to be front-running this development, with low-caps and presale tokens in high demand. For instance, a new meme coin Pepe Unchained (PEPU) has raised over $8.2 million in its presale.
Several new meme coins delivered 10x to 100x returns during the crypto bull run earlier this year. This phenomenon could well be repeated in the coming months.
Pepe Unchained also appears to be ideally placed for attracting retail investment, considering it will launch its own Layer-2 chain. The low trading costs and high staking rewards are particularly attractive for retail investors.
Most importantly, it is a frog-themed meme coin which could receive a major boost from a Pepe bull rally. Consequently, experts believe that it can offer up to 50x returns after its launch.
Similarly, a play-to-earn meme coin – PlayDoge (PLAY) – has caught the attention of meme coin enthusiasts, owing to its likeness to Floki.
In addition to its Tamagotchi-style gameplay, it also offers attractive staking rewards on Ethereum and BNB Smart Chain. Unsurprisingly, it has raised over $6 million in its ICO.
*Cryptonomist did not write the article or test the platform.