US CPI Inflation Estimated To Come In Hot, Crypto Market Rally To End?

The market participants appear to be shifting their focus towards the upcoming US CPI inflation data, as evidenced by the recent muted trading in the broader financial sector. The crypto market also witnessed a slump today, with Bitcoin, altcoins, and meme coins, taking a hit. According to estimates from the big banks, the inflation figure is expected to come in hotter, which has likely weighed on the investors’ sentiment.

Considering that, discussions are soaring if the US Federal Reserve will move ahead with a dovish plan.

US CPI Inflation Expected To Come In Hot

The investors appear to be waiting on the sideline, ahead of the crucial US CPI inflation release by the Labor Department later today. The digital assets space, along with Bitcoin and other top altcoins noted muted trading, with the global crypto market cap falling down to $2.89 trillion. Notably, the crypto market has recently touched the brief $3 trillion mark for, the first time since 2021.

A flurry of market experts anticipates the CPI figures to come in hotter than expected. According to Investing analyst Jesse Cohen, only Goldman Sachs and Bank of America expect the US inflation to come in at 2.4% in October, unchanged from the September figures.

However, Wells Fargo sets its target at 2.5%, with other big banks like JP Morgan, CITI, HSBC, and others, expecting the year-over-year CPI to come in at 2.6%. This spike in the US CPI from the previous month is likely to weigh on the investors’ sentiment.

Recently, the US Fed announced a 25 bps rate cut at their November FOMC. However, the expected hotter-than-expected inflation might impact the monetary policy decision of the central bank. Having said that, many are wondering if the US Fed will move with its dovish plan at their December gathering.

Crypto Market Rally To Halt?

Despite the US CPI inflation is expected to come in hotter than expected, the market still anticipates another Fed rate cut in December. According to the CME FedWatch Tool, there is a 62% probability of another 25 bps point cut in December, with the remaining percentage expecting no change in the Fed’s monetary plan.

Amid this, concerns have soared if it can put an end to the robust rally in the crypto market, which started after Donald Trump’s election win. Although many expect a short-term pullback in the market and crypto prices, market experts appear to have remained optimistic.

A flurry of analysts said that despite the short-term volatility this week, the market is poised for a rally in the coming days. Fueling the sentiment, veteran trader Peter Brandt has shared a bullish forecast for BTC, predicting the crypto to hit $327K.

However, the upcoming US CPI inflation figures, along with US PPI and Fed official’s remarks will be closely watched for potential cues on the market’s future. Besides, Fed Chair Jerome Powell is also expected to speak this week, which is likely to shape the broader market sentiment. Last week, Powell said that the Fed will remain cautious with their policy rate plans, which has caught the eyes of investors.

Despite all these concerns, it appears that digital assets will see a recovery in the coming days, given pro-crypto sentiment hovering in the market. In addition, Donald Trump’s key promises for the crypto sector have also boosted the sentiment, which is likely to continue to fuel the investors’ sentiment in the coming days.