Cryptocurrency markets dropped surprisingly after yesterday’s low producer inflation data. Today, the US producer inflation data was released. This data is crucial as it is a leading indicator for the Consumer Price Index. So, how will cryptocurrencies be affected?
The US producer inflation data came in better than expected. The data suggests that the Consumer Price Index may continue to decline next month. On the other hand, the crypto currency markets did not react to this data, which strengthens the possibility of a rate cut by the Fed. Despite the data that should support the markets, the ongoing sell-offs keep the price at $36,000.
Annual Announcement: 1.3% Expectation: 1.9%
Annual Core PPI Announcement: 2.4% Expectation: 2.7%
While a monthly increase of 0.1% was expected, it was announced as -0.5%. The expectation for a rate cut by the Fed in July next year had risen to 50bp yesterday. At the time of writing this article, the current expectations for the upcoming meetings are as follows.
Although it is uncertain when all these positive data will be reflected in the price, it is certain that they will support the risk markets and undermine the hawkish stance of the Fed. The possibility of interest rates remaining unchanged at the December and January Fed meetings is over 97%. The probability of a 25bp rate cut in May is 51.5%.