Bitcoin and the larger cryptocurrency market are closely monitoring the data set to be released tomorrow. Following last July’s US CPI inflation data release, BTC prices displayed significant fluctuations. Currently, with only one day remaining until the data release, BTC hovers around $60,000. While Bitcoin’s movements have been subdued over the past 24 hours, Ethereum and several other high-volume altcoins have recorded gains exceeding 4%.
What Drives Bitcoin and Ethereum Prices?
In anticipation of the US CPI inflation data, which garners global attention, traders are rapidly closing short positions in Bitcoin and Ethereum. Notably, in the past 24 hours, $91 million in short positions and approximately $86 million in long positions have been liquidated.
Preliminary reports suggest that the US CPI data might reveal a rise in inflation, heightening concerns about whether the Federal Reserve will opt to cut rates in September. Market forecasts predict a 0.2% increase in July inflation, contrasting with the 0.1% decrease observed last month.
Could Ethereum Break Its Downward Trend?
Over recent weeks, Bitcoin’s price has fluctuated between $50,000 and $60,000. Last week’s downturns have led some market analysts to speculate that BTC could once again dip below $50,000 before an anticipated bull run.
Currently, Ethereum is trading at $2,646, reflecting a 2.35% increase and a market cap of $318 billion. Today’s price rise is being debated as a possible “dead cat bounce,” potentially due to sales from wallets established during the ETH ICO.
Key Insights for Investors
The ETH/BTC pair has shown recovery signs ahead of the CPI announcement, despite moving in a downward channel since the September 2022 Merge event. Research by 10X Research highlights that previous upgrades like Merge and Dencun had minimal impact on Ethereum’s price, leaving investors disappointed.
Key takeaways for investors include:
- Monitor the upcoming US CPI inflation data closely for market impact.
- Anticipate potential volatility in both BTC and ETH prices following the data release.
- Consider the historical performance of cryptocurrency prices during similar macroeconomic events.
- Be aware of the potential for short-term price movements to be misleading.
In conclusion, the cryptocurrency market is poised for potential volatility with the upcoming US CPI inflation data release. Investors should remain vigilant and consider the historical context and current market conditions when making trading decisions.