The #Altcoin bottom could be in today!

It’s a big event day as multiple macroeconomic events are happening.

First, it will be CPI news, and later there’s the FOMC meeting and the FED interest rate decision to be made.

They will have a huge impact on the markets.

The markets have been correcting down as the anticipation of these events usually has a negative relationship with the price action on the crypto markets, especially altcoins. On top of that, Roaring Kitty’s event and GameStop’s correction of last week didn’t have a positive impact on the price action.

Now, today the turn-around might be taking place, just like the previous FOMC meetings saw a bottom on Wednesday, after which the markets were surging.

Comparison:

Bitcoin rallied by more than ten percent after previous FOMC events.
Ethereum rallied by more than twenty percent after previous FOMC events.
Both of them corrected by the same amount before the event, so a repricing back upwards seems reasonable to expect. Let’s discuss the two big events of today.

CPI at 14.30PM CET

The CPI data is the most important in the month, as the FOMC is watching this data (and the PPI of Thursday) to estimate whether inflation is weakening and whether they can cut the interest rate levels.

During 2024, the inflation rate was higher than expected. As a reference:

April the actual CPI rate came at 3.5%, while 3.4% was forecasted. In March, 3.2% was the actual number, while 3.1% was expected. Due to this, you could argue that inflation remains sticky and that’s exactly what Jerome Powell has been continuing to say.
However, there are more important data points that come out during this event.

CPI M/M. The monthly data on CPI estimates what the change in price of goods and services is compared to the month before. Last month the markets have been seeing a lower number than forecasted and reacted in a very positive way.
Core CPI Y/Y. The Core Consumer Price Index (a different basket than the regular CPI data), was exactly as expected in the previous month and induced another positive response to the markets.
Core CPI M/M. The Core Consumer Price Index, but then on monthly data points. Last month was the same as forecast.
This might be a significant data point, as it could indicate that the markets are anticipating a rate cut.

What are the expectations?

The expectations are that we’re going to be seeing the following data points:

CPI Y/Y: 3.4% expected
CPI M/M: 0.1% expected
Core CPI Y/Y: 3.5% expected
Core CPI M/M: 0.3% expected
If the data comes out exactly as expected or some data points are going to be lower (which is positive for the markets) than expected, the markets are going to see a swift positive price response.

FOMC Rate Decision at 20.00PM CET & FED Speech at 20.30PM CET

The second biggest event of today is the interest rate decisions from the FOMC. The European Central Bank made its first rate cut since 2019 last week, which might indicate that rate cuts are on the horizon for the U.S. as well.

That’s why the CPI data might become important, as the markets might price in a potential rate cut from the CPI data or not. Why is that? Well, if CPI data comes out higher than expected, you’re automatically going to be seeing a strong Dollar continue to rise, but also Yields to continue rallying upwards. In that aspect, it’s unlikely that a rate cut is taking place in the coming period through which risk-on assets are going to be seeing a drop rather than a rally upwards.

With this event, it’s usually not important to be watching the actual rate decision, but rather to look out for Powell’s speech as he might be giving insights on the future’s outlook. If he becomes more decisive and starts spreading words like ‘we’re expecting 2 rate cuts later this year’, the markets are going to be acting in a tremendously positive direction.

What to watch out for?

The altcoin and crypto markets have been seeing a substantial correction in the previous weeks as there’s a negative correlation between FOMC meetings, CPI, and crypto.

To be fair, it seems likely that a repricing back upwards is going to take place starting this afternoon back upwards. It might even be the case that Bitcoin is attacking an all-time high in the coming weeks if there’s a dovish stance from the FOMC.

It’s important to note that price action can be trappy. If the rate decision is unchanged, the markets might have an initial response downwards, but usually, the real move happens at a later point. I would suggest not taking leverage trades during this period.

My personal view is that you should be keeping an eye out for the response on the price action of Gold, the Dollar & the Yields on treasury notes.

I’m expecting that the Dollar and the Yields are going to fall from the data today/tomorrow (tomorrow is PPI day) and that the altcoin and crypto markets will be finishing their correction around this period.

After that, it’s upwards only where the Ethereum ETF is likely going to find approval in the coming weeks and start attacking the all-time high during the summer.