Crypto Amid Fed – The cryptocurrency market is currently navigating through a period of significant anomalies following the release of the U.S. Consumer Price Index (CPI) data on July 11, 2024. The CPI data revealed a 0.1% decrease, marking the first decline since May 2020, which has spurred expectations of potential interest rate cuts by the Federal Reserve in September 2024.
Fahmi Almuttaqin, a crypto analyst at Reku, has provided insights into the market’s future trajectory amidst these developments. His analysis highlights the possible impacts of these economic shifts on the crypto market, including the potential for increased capital inflows and the broader implications for various cryptocurrencies.
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CPI Data and Market Reactions
The CPI data for June, released on July 11, 2024, showed a decrease of 0.1%, marking the first decline since May 2020. This brought the year-on-year (YoY) CPI increase to 3.0%, down from 3.3% in May 2024. This development has heightened market expectations for a potential rate cut by the Fed in September, which could significantly impact the crypto market positively. There is also growing anticipation of further rate cuts at the FOMC meetings in November.
Fahmi Almuttaqin highlighted the importance of these inflation trends for the outlook of the crypto market in the coming months. “With improving inflation trends, the potential for increased fresh capital inflows into the crypto market due to the U.S. adopting a more relaxed economic policy appears closer. However, the crypto market, which has been under considerable pressure since early June, might not respond significantly to these developments,” Fahmi explained.
U.S. Stock Market and Crypto Market Dynamics
The U.S. stock market, which has rallied since June, might view the recent CPI data as an opportunity for profit-taking ahead of the earnings season. “This situation differs somewhat from the crypto market, where Bitcoin, which was at $70,000 on June 5, dropped to around $54,000 on July 5,” he noted.
The increased pressure on the crypto market in recent days is also reflected in the Fear & Greed Index, which measures market sentiment through various data sources, including social media. “The Fear & Greed Index compiled by alternative.me hit its lowest level of 25 today, Friday, July 12, 2024, a level last seen on January 9, 2023, when Bitcoin was at $17,000, one of its lowest prices after the 2021 crypto bull cycle,” Fahmi added.
ETF Proposals and Market Responses
The lack of significant impact on crypto assets from recent positive developments is not limited to CPI data. The proposal for a Solana ETF by VanEck and 21Shares has not led to a significant increase in the price of SOL tokens. “While there are several factors that could explain this situation, such as the relatively low market optimism about the approval of the ETF, this is not typical for the crypto market,” Fahmi explained.
Potential of Crypto Amid Fed
Fahmi further pointed out that the current anomalies could present an interesting situation for investors. “The situation where there are tangible positive developments in various aspects that have not yet been reflected in the rising prices of crypto assets in the market can be a moment to hunt for potential crypto assets. Crypto assets with solid adoption value but whose price performance has not yet been significantly appreciated hold interesting potential that investors can explore more closely, which is usually difficult to do when the market moves at a faster pace. Reku also regularly adds new crypto assets every week to expand investors’ diversification options,” he emphasized.
However, Fahmi also advised investors to remain prudent when making investment decisions and to choose safe and registered crypto investment platforms to avoid technical risks. “Additionally, investors can also adopt regular saving or Dollar-Cost Averaging (DCA) while monitoring market conditions regularly. Investors can easily view their investment summary through the Investment Insight feature available on Reku, allowing them to monitor their periodic investment performance and coins in real-time without having to calculate manually,” he concluded.
The crypto market is in a state of flux following the latest CPI data release, with potential positive impacts looming if the Federal Reserve moves to cut interest rates. While the market has been under pressure, leading to cautious investor sentiment, the anomalies present unique opportunities for discerning investors. By staying informed and making prudent investment choices, investors can navigate this uncertain landscape and capitalize on emerging opportunities.