US inflation report expected to shake up cryptocurrency markets this week

The coming week will be very dense with economic data and reports, with important inflation data due to be released. But will the release of these data have an impact on the cryptocurrency market?

Following last week's decline, the cryptocurrency market remained flat over the weekend, with the total market capitalization falling to $2.38 trillion.

This week's economic calendar is likely to spark more volatility as key inflation data is released alongside a series of Fed speeches that could signal the direction of future monetary policy.

Economic data, Fed policy and market expectations

On Tuesday, a report will be released on the core Producer Price Index (PPI), which shows input prices for producers and manufacturers. It measures the cost of making consumer goods and has a direct impact on the pricing of retail products.

It is seen as a leading indicator of future inflationary pressures and has therefore become a key signal in predicting the direction of the Consumer Price Index (CPI) next month.

Wednesday will see the release of April's core CPI report, one of two main measures of inflation, the other being personal consumption expenditures (PCE).

The Consumer Price Index (CPI) directly determines the price trend in the economic system, consumer behavior and corporate market expectations. It also has a direct impact on the Federal Reserve's interest rate decisions.

Kobeissi Letter noted: "If inflation continues to rise this week in the Consumer Price Index (CPI), it will be the third consecutive month of growth."

Including Fed Chairman Jerome Powell's speech on Tuesday, a total of 12 speeches by Fed officials will be held this week.

A majority of U.S. CEOs predict the Federal Reserve will cut interest rates only once this year, according to a recent Conference Board Expectations Survey of CEOs.

Of the 136 CEOs surveyed, 31% said they did not expect any rate cuts this year, while 26% expected two rate cuts. Kobeissi reported: "Meanwhile, the market has priced in two rate cuts this year based on the base case, with the first rate cut expected to occur in September."

Notably, Elon Musk criticized the Federal Reserve over the weekend, comparing it to the Monopoly board game. He specifically cited a description of the in-game bank in the game's rules, stating that the bank can never fail and can print new currency if necessary.

Cryptocurrency Market Outlook

Cryptocurrency markets in Asia were relatively calm on Monday morning, with most major currencies seeing little movement.

At the time of writing, Bitcoin price is around $62,675, up slightly from yesterday. However, the asset remains in a downward trend since this time last week.

Ethereum failed to recover back to that level after falling below $3,000 on May 10 and remains bearish in the short term at $2,900 at the time of writing.

Altcoins are mainly in the red, with Solana, Dogecoin, Avalanche and Near Protocol seeing larger losses.

Conclusion

This week, cryptocurrency markets will be closely watching the release of U.S. inflation data and speeches from Federal Reserve officials, key events that could have a significant impact on monetary policy expectations. Although the performance of Bitcoin and other major cryptocurrencies in Asian markets is temporarily stable, market expectations are to fluctuate with the release of economic data. Investors need to remain vigilant and pay attention to economic indicators and central bank dynamics to grasp the short-term and long-term market trends.

Additionally, Elon Musk’s criticism of the Federal Reserve highlights public concerns about transparency and accountability in monetary policy, which could further fuel interest in decentralized finance (DeFi). Although the market may be volatile in the short term, in the long term, technological innovation and market demand will continue to drive the growth and evolution of the cryptocurrency industry.

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