Crypto Market Rocked by Massive Selling Pressure as CPI Data Looms
- US CPI weighs over the market: Despite signals hinting towards lower-than-expected CPI data, the crypto market has been hit with $56 billion removed in the last 24 hours.
- Total Crypto Market Cap: $56 Billion has been wiped off the crypto market in the last 24hrs.
- Senator rate cut request: Senator Elizabeth Warren and colleagues urge the Federal Reserve to lower current high interest rates.
All Eyes on CPI Data out of the US: Will It Shake the Crypto Market?
Bitcoin failed to break the highs last week of approximately $72,000 and instead plummeted back to below $70,000. At the time of writing, it is now trading at $67,900 as the markets gear up for a big week of market news out of the US.
Many don’t realise just how much of an impact the US markets have on crypto, and with CPI data releasing tonight, all eyes are locked on what the result may be.
A lower-than-expected forecast could further hint that inflation is starting to get under control, potentially influencing a rate cut in the US. Europe and Canada have already led the pack with rate cuts already announced.
In my opinion, crypto is still classified as a risk asset and is treated as such; if interest rates begin to fall, it makes risk assets more appealing.
You can see in the image above that the last time positive CPI data was announced, i.e. actual figures came in below the forecasted rate, Bitcoin accelerated approximately 8%.
Crypto Total Market Cap Edges Towards Critical Support: $56 Billion Wiped Out!
The total crypto market cap is witnessing the brunt of widespread selling among investors. Adding to the bearish sentiment is the upcoming US inflation report set to arrive in the next 24 hours.
The inflation rate is expected to decline, but uncertainty still plagues the market.
As a result, about $56 billion has been removed from the market in the last 24 hours. This has brought the combined value of all crypto assets down to $2.40 trillion, nearly losing the three-week-long support level of $2.39 trillion.
A fall below this level could see further selling pressure.
Plea to Fed: Senators Push for Interest Rate Cuts Amid Rising Pressure.
The Federal Reserve has maintained high interest rates for too long, and it’s time for a change. On Monday, three Democrat senators sent a letter to Federal Reserve Chairman Jerome Powell, urging for a rate cut.
“We write today to urge the Federal Reserve (the Fed) to cut the federal funds rate from its current, two-decade-high of 5.5 percent. This sustained period of high interest rates is already slowing the economy and is failing to address the remaining key drivers of inflation,” Senators Elizabeth Warren (D-Mass.), Jacky Rosen (D-Nev.) and John Hickenlooper (D-Colo.) wrote, according to a document on the HuffPost website.
Requests like this, in my opinion, are not made lightly. Although they’re great for public attention, to me, it hints at the fact that the Fed is starting to feel the pressure from external parties.
It’s hard to deny that the rising interest rates have had a significant impact on the cost of living, and therefore retail is very cautious of their money choices at present. If interest rates were to drop, this could be bullish for risk assets like Bitcoin.
The complete letter can be found here.
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At the time of writing this article, Bitcoin was trading at $67,900.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial advice. The author takes no responsibility for any financial losses incurred as a result of trading or investing based on the information provided. Always conduct your own research and consult with a professional financial advisor before making any investment decisions.