CPI inflation data shapes Fed rate expectations. Higher-than-expected inflation increases the odds of Fed rate hikes in September. Rising rates are a headwind for crypto, which generates no yield.
Bitcoin and Ethereum depend on speculative demand, not yield. When interest rates rise, investors rotate to bonds and cash. That's bad for non-yielding assets. When rates fall or stay low, speculators return.
A disappointing jobs report sparked a crypto rally because it signaled lower inflation risk and softer Fed action. If CPI comes in hot this week, that optimism reverses—and selling resumes.
Bitcoin is testing $63,500 support. Ethereum fell below $1,900, a key psychological level. If CPI is hotter-than-expected, both could break lower. A CPI beat could reignite the July rally.
Track CPI data release Wednesday morning. A beat (inflation lower) = bullish for crypto. A miss (inflation higher) = bearish. This week's crypto direction hinges on this one macro print.
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