The cryptocurrency market turned negative in the early morning of today (10th), with Bitcoin hitting a low of $60,388, reflecting that investors were holding back before the release of the U.S. Consumer Price Index (CPI) in September.
As the market has withdrawn its previous high expectations for the Federal Reserve (Fed) to continue to cut interest rates significantly, the U.S. dollar has been rising for days, adding pressure to the cryptocurrency market.
CoinGecko market data shows that Bitcoin has now rebounded to around $61,000, but is still down more than 1.5% in 24 hours; Ethereum fell by a similar amount, down 1.5% to $2,393.
Meanwhile, the U.S. dollar index (DXY) climbed to 102.97, reaching its highest since August 16 and up 2.7% from the September 30 low of 100.18.
According to FedWatch data from the Chicago Mercantile Exchange (CME), futures market traders estimate that there is an 85% chance that the Fed will cut interest rates by 1 point (25 basis points) when it announces its interest rate decision on November 7, which is much higher than the 65% chance a week ago. %.
The September non-farm payrolls data released by the United States last week far exceeded expectations. The probability of the U.S. economy not landing in the short term has increased, forcing traders to re-evaluate the extent of the Fed's interest rate cuts. The Interest Rate Policy Committee was divided during its September meeting, but a majority still supported a 2-yard (50 basis point) rate cut, according to Fed meeting minutes released on Wednesday.
Alex Kuptsikevich, senior analyst at FxPro, said: "Cryptocurrency market sentiment has once again returned to the fear zone (39 points), which is in sharp contrast to the stock market's greed index (72 points)."
He further explained that this dynamic is mainly driven by the "appreciation of the U.S. dollar" and the "increased attractiveness of U.S. debt," which has also reduced institutional investors' interest in Bitcoin.
Alex Kuptsikevich also mentioned that if the CPI released at 8:30 tonight exceeds market expectations, it will weaken the possibility of the Federal Reserve cutting interest rates, further push up the trend of the US dollar, lead to a reduction in market risk appetite, and may trigger cryptocurrency market shocks.
According to FXStreet forecast data, the U.S. CPI index in September is expected to increase by 0.1% monthly and 2.3% annually; core CPI (excluding food and energy prices) is expected to increase by 0.2% monthly and 3.2% annually.
However, ING mentioned earlier this week that the CPI data may not have a significant impact on the market as the Fed's focus has turned to the labor market.
"Analysts warn: If tonight's CPI data exceeds expectations, it may trigger a shock in the currency market." This article was first published on (Block Guest).
