Inflation Data — Here's How Crypto Will Respond Today!

The consumer price index (CPI) is set to be released this Wednesday, just ahead of the Federal Reserve's upcoming meeting, where they might begin a series of interest rate cuts. This data will play a crucial role in shaping the Fed's decisions and market reactions.

If the report shows inflation is lower than expected, the Fed could potentially ease rates more quickly or aggressively. On the other hand, if inflation is higher, the Fed may take a more gradual approach.

Here's what to watch for:

- Consumer prices are expected to rise by 0.2% from July.

- Core CPI, which excludes food and energy, is also forecasted to increase by 0.2%.

- Year-over-year, CPI is expected to drop to 2.6%, while core CPI will likely remain at 3.2%.

My Outlook and What It Means for Crypto:

The market is anticipating a 25 basis points rate cut in September.

I don't expect any surprises, and the CPI data should align with expectations. If that's the case, the Fed will likely go ahead with the 25 basis points rate cut in September.

Although there's excitement around the rate cuts, I predict that crypto prices will decline in the short term, as this outcome has already been priced in.

However, if CPI comes in significantly higher, it could raise hopes of a 50 basis points rate cut, which might lead to an increase in crypto prices.

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