tl;dr
The crypto market is bracing for the delayed U.S. CPI report, which could trigger significant volatility. Analysts warn that a 3%+ inflation reading might curb Fed rate-cut hopes, while a lower number could boost risk-on assets like Bitcoin.
**Crypto Market Eyes Delayed US Inflation Report as Key Test for Risk-On Assets**
The crypto market is closely monitoring the delayed release of the U.S. Consumer Price Index (CPI) for September, which is expected to show inflation exceeding 3% for the first time in 2023—a development that could significantly influence market dynamics. The report, postponed due to the ongoing government shutdown, is set to be published on Friday and has become a critical focal point for investors and analysts alike.
The U.S. Bureau of Labor Statistics (BLS) announced the delay as the federal government remains shut down for its 24th day. Despite the setback, economists anticipate the CPI to rise 0.4% month-over-month and 3.1% year-over-year, marking the first time headline inflation has surpassed 3% this year. This figure would also represent the highest CPI print since June 2024, according to analyst “Ash Crypto.”
### Inflation Data Could Shift Market Sentiment
The CPI release comes as the first major economic indicator since the government shutdown, which has disrupted data collection and added uncertainty to the economic landscape. Analysts suggest that the report’s outcome could sway investor confidence in risk-on assets, including cryptocurrencies.
Ted Pillows, an investor, noted that if the CPI exceeds 3.1%, the likelihood of a Federal Reserve rate cut could diminish. Conversely, a reading below 3.1% would be “good for the markets,” he said. Similarly, “Ash Crypto” warned that a CPI print above 3.1% would be bearish, potentially triggering sell-offs. However, a figure in line with expectations—around 3.1%—could still be favorable, as it would signal stability and open the door for further rate cuts.
### Fed’s Focus on Employment Over Inflation?
While inflation remains a key concern, the Federal Reserve has shifted its attention to the labor market, which has shown signs of weakness. Despite this, the CPI data could still impact the central bank’s decisions. Matt Maley, chief market strategist at Miller Tabak, told Bloomberg that unexpected inflation numbers could alter the Fed’s thinking, even if employment trends remain the primary focus.
Barron’s added that hotter-than-expected inflation is unlikely to derail the Fed’s rate-cut plans, as the central bank’s priority remains stabilizing the labor market. CME futures markets currently price a 98.3% probability of a rate cut at the Fed’s next meeting, though the government shutdown may complicate economic forecasts ahead of the December meeting.
### Crypto Market Shows Resilience Amid Uncertainty
Despite the looming CPI report, the crypto market has seen modest gains. Market capitalization rose 1.8% over the past 24 hours, reaching $3.8 trillion. Bitcoin, the leading cryptocurrency, surged above $111,000 in late Thursday trading but later retreated to around $110,500. Analysts suggest that a weaker-than-expected CPI print—either 0.1% month-over-month or 1.2% annualized—could further boost risk-on sentiment, driving liquidity into assets like Bitcoin.
### What’s Next?
As the crypto community awaits the CPI data, the interplay between inflation, interest rates, and market psychology will remain central to price movements. While the Fed’s focus on employment may temper the impact of inflation, the outcome of Friday’s report could still act as a catalyst for volatility. For now, investors are cautiously optimistic, hoping for a “perfect scenario” of stable inflation and continued rate-cut expectations to fuel the market’s upward trajectory.
The coming days will test whether the crypto market can maintain its momentum amid broader macroeconomic uncertainties.