The latest US inflation figures (CPI) have just been released, sending the markets into a frenzy. Every decimal point could sway the Fed's expectations for January. Rates, liquidity, the dollar - everything is at stake. Cryptocurrencies could be the first to react.
Economists are anticipating a rise in annual inflation to 3.1% in November, compared to September’s levels. Core inflation, which excludes volatile food and energy prices, is also expected to climb to 3%, a significant psychological threshold for the markets. TD Securities goes even further in its projections and expects annual inflation at 3.2%, driven primarily by soaring energy prices.
This potential increase comes as the crypto markets are going through a consolidation phase following the recent post-election rally. Bitcoin is hovering around its major resistance levels, while risk appetite remains measured. Trading volumes on exchanges show a certain caution, typical of periods preceding crucial macroeconomic announcements.
For digital asset holders, the message is clear: rising inflation complicates the scenario of an accommodative Fed. Cryptocurrencies, often perceived as hedges against inflation, paradoxically react poorly in the short term when central banks tighten their monetary policy.
The CME FedWatch tool reveals that markets are currently only assigning about 20% probability to a 25 basis point rate cut in January. This figure reflects the prevailing skepticism about the Fed’s ability to ease its restrictive policy in the immediate future. Crypto traders must incorporate this data into their technical and fundamental analysis.
If the US CPI comes in at 3.3% or higher, the scenario of a Fed status quo in January would be almost automatically confirmed. In this case, the dollar would likely strengthen its position, which would exert downward pressure on Bitcoin and the entire crypto market in the short term. The negative correlation between the DXY and BTC remains a determining factor for positioning.
Conversely, a downside surprise with CPI at 2.8% or lower would open the door to a dovish surprise from the Fed. Crypto markets would react positively to this scenario, with a potential resumption of bullish momentum. Altcoins, which are more sensitive to liquidity variations, could outperform in such a context. Traders will need to monitor key support and resistance levels in the hours following the release.
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