CPI data released tonight: good or bad?
Impact of CPI data on the cryptocurrency market
Inflation expectations:
Strong CPI data: If the CPI data is higher than expected, the market may worry about rising inflation. In this case, investors may seek safe-haven assets, and cryptocurrencies such as Bitcoin are often regarded as "digital gold", so they may attract more investment.
Lower-than-expected CPI data: If the CPI data is lower than expected, it means less inflationary pressure, and the market may think that the Federal Reserve has more room to maintain loose monetary policy, which may also be good for the cryptocurrency market.
US dollar exchange rate:
Strong CPI data: It usually supports a stronger US dollar exchange rate because the market may expect the Federal Reserve to accelerate the pace of interest rate hikes. This may be negative for cryptocurrencies denominated in US dollars, because a strong US dollar usually suppresses the prices of assets denominated in US dollars.
Lower-than-expected CPI data: It may lead to a weaker US dollar, which in turn is good for the cryptocurrency market, because a weak US dollar usually drives up the prices of assets denominated in US dollars.
How the market reacts, we will wait and see.
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