Bitcoin’s (BTC) price action has become less certain in recent days as a slew of U.S. macro data promises volatility across Bitcoin and risk assets. On April 12, BTC/USD traced $30,000 as looming United States macroeconomic data heightened nerves. Analysts warn markets are “discounting significance” of CPI data, which is due at 2.30 pm Eastern time. The release of the FOMC minutes may have an equally influential impact on cryptoassets thanks to the divergence of the Fed’s position versus market sentiment.
The Consumer Price Index (CPI) for March is due, followed by minutes from last month’s meeting of the Federal Reserve Federal Open Market Committee (FOMC), at which policymakers confirmed a 0.25% interest rate hike. “Today is US CPI day, and for the first time in a long while, it feels like the market is discounting the significance of this event…,” analytics account Tedtalksmacro wrote in part of Twitter commentary.
QCP Capital wrote in a market update released on the day, “Markets are 75% priced for a 25bps hike in May. Therefore this number carries great importance either way. A lower than expected print will likely take off the hike and lead to a risk asset rally.” Data from CME Group’s FedWatch Tool shows expectations of rate hikes continuing in May, but potentially pausing thereafter. Fed policy remains hawkwish, while pressure from the recent banking crisis has markets unsure as to what further policy tightening is feasible.
The release of the FOMC minutes may have an equally influential impact on cryptoassets thanks to the divergence of the Fed’s position versus market sentiment. “Investors will closely scrutinize the reasons for the Fed’s downshifting and what they will keep an eye on in terms of the banking sector, liquidity, and overall market performance. While data dependency on inflation will be a critical factor, comments about bank stability will carry weight, in particular how many rate hikes the Fed see the current credit tightening as being equivalent to,” the update stated.
Ahead of the Ethereum (ETH) Shanghai upgrade mainnet launch, meanwhile, altcoins had a difficult 24 hours, with many of the top ten cryptocurrencies by market cap shedding 3-4%. In so doing, altcoins reversed the gains, which accompanied Bitcoin’s push past the $30,000 mark. Ether strength against Bitcoin fell to ten-month lows on the day, with ETH/BTC trading at 0.062.
Popular trader Credible Crypto reacted, “As expected that strength on ETH/BTC was short lived. He added that the performance did not “speak so much to weakness on ETH per se, but rather just much more strength on BTC as we continue our parabolic advance to new all-time highs.”
In summary, as the release of the FOMC minutes and CPI data loom, the cryptocurrency market is bracing for volatility. BTC’s price action is becoming less certain, with altcoins shedding gains and Ether strength against Bitcoin falling to ten-month lows. Investors will closely scrutinize the reasons for the Fed’s downshifting and what they will keep an eye on in terms of the banking sector, liquidity, and overall market performance. While data dependency on inflation will be a critical factor, comments about bank stability will carry weight.
