Economist Issues Warning Ahead of CPI Report on 14 February–Bitcoin and Ethereum in Trouble?
The crypto market had a bullish Saturday session but regulatory risk and Fed fear will still be obstacles, limiting short-term gains. The US Securities and Exchange Commission recently took a harsh stance against US crypto exchange Kraken, putting the overall cryptocurrency sector under pressure. A move that caused double-digit losses for several crypto assets.
Bitcoin dropped below $22,000 for the first price in three weeks amid this gloomy news, and the market cap of cryptocurrencies decreased by more than $40 billion. To add fuel to fire, on February 14th, the CPI, which tracks the rate of change in US inflation over time, is expected to be released.
Alex Krüger, an economist and trader claims that Ethereum (ETH) and Bitcoin (BTC) may have additional downside potential but that a fresh crypto rally is close at hand. Krüger claimed that the decline in cryptocurrency prices was a logical reaction to Kraken’s staking services being shut down by the U.S. Securities and Exchange Commission (SEC). But according to his forecast, the cryptocurrency markets might recover as soon as the following few days.
“Quick crypto market views. Not adding size just yet. Think next bull run starts either with CPI [consumer price index] or end of month. BTC and ETH still have round levels below to run over. Not stressed about the market either. See this as a healthy pullback. Turn full bear on only if CPI beats by 0.2%.”
CPI is a frequently watched statistic because traders interpret new data as a sign of what the Federal Reserve will do next to fight inflation. The Fed may decide to hold off on its aggressive interest rate hikes in response to a CPI report that is below consensus expectations, which is typically interpreted as a bullish indicator.