Crypto Markets Drop 3% Ahead of U.S. CPI Release
Crypto markets declined by 3% over the past 24 hours as investors await U.S. consumer price index (CPI) data, which could influence market movements.
- Bitcoin lost 1.3%
- Ethereum, Solana, Cardano, and XRP saw losses of up to 3%
- Dogecoin dropped 4.5%, while BNB gained 1%
- The CoinDesk 20 index fell by 2.5%
The CPI measures price changes for a basket of consumer goods and services. Expectations for January CPI include a 0.3% monthly increase and a 12-month inflation rate of 2.9%. This may impact the Federal Reserve's interest rate decisions.
Traders anticipate a dollar unwind if indications of a rate cut emerge, potentially benefiting crypto investments. QCP Capital noted that negative news is likely priced in, suggesting potential downside risk for the dollar. A positive CPI release could trigger a shift in positions among USD longs, possibly boosting risk assets.
However, Bitcoin's performance remains weak compared to equities and gold, indicating caution within the crypto community. Ongoing thin liquidity and recent large-scale liquidations add to this hesitance. QCP recommended purchasing downside protection options as a viable strategy in the current market environment.