Ahead of CPI, Dovish Sentiment Boosts Crypto
The crypto market rallied on Thursday. Bitcoin (BTC) was trading around $114,000, while Ethereum (ETH) hovered around $4.43,000, and Solana (SOL) approached $225. This rise aligns with improving global risk sentiment, although market participants remain cautious ahead of the release of US consumer inflation (CPI) data.
The main driver of the crypto rally came from weak US Producer Price Index (PPI) data for August, reinforcing expectations of a Fed rate cut next week. Fed fund futures now price a 25 bps cut as the base case scenario, with the chance of a 50 bps cut remaining remote (around 10%). Historically, the prospect of lower interest rates tends to support riskier assets like crypto because it increases liquidity and lowers real yields.
The next focus is tonight's US CPI release. A simple scenario: below-forecast inflation has the potential to bolster risk appetite and extend the crypto rally; conversely, above-forecast inflation could trigger dollar strength and short-term profit-taking. Intraday volatility can potentially increase around release times, so risk management remains crucial for both traders and investors.
Source: Newsmaker.id