Why are the crypto markets up? Market eyes very important week

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cryptocurrency market This year has gotten off to a hot start, with Coins across the board making it into 2020 for a rapid upward trajectory.

moves come off the back of optimism inflation It’s getting cold. we looked at european inflation below expectations Last week, it fell to 9.2%, against expectations of 9.5%, and down from 10.1% last month.

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renewed hope comes from behind a 50 bps increase Interest rates in UK, Europe and US last month after a previous hike of 75 bps each. The slow growth reflects that while inflation remains high, the numbers are suggesting it may have peaked – and with two months of positive readings, things are looking brighter than at least last year.

As prices soar, this is all crypto needed to hear. While the new year is only nine days away, crypto investors are finding some respite after the new year armageddon that was 2022,

What will happen to crypto this week?

But the big one is Thursday, with US CPI data to be announced. As has become a monthly ritual over the past year, eyes will be glued to the screens to get that all-important number. A lower-than-expected reading could see the market rally again.

On the flip side, a disappointing reading could lead to worse price action than usual, given the momentum it has gained after two consecutive months of stable inflation data. Markets also rallied last week on the back of the nonfarm payrolls report, with investors reading the data as potentially leading to an earlier Fed pivot than anticipated.

Nonetheless, inflation remains high and the labor market still shows flexibility. We need to see a little more weakness after that and a solid drop in demand before the Fed eases up on its promise that it will do everything in its power to add to oblivion and nuke inflation.

Expect volatility in the week ahead

In the coming week, there can be any ups and downs in the market. Since ftx collapse In early November, the crypto markets have actually been relatively quiet. I charted volatility going back before Bankman-Fried showed the world its true colors, and it clearly shows the upswing in mid-December and the subsequent decline.

Crypto is therefore back to what it has been doing for most of the past year, with a few isolated episodes – and it is following the stock market.

After Thursday’s CPI reading, the next important date is February 1scheduled tribe, This is when the next FOMC meeting will take place, or in other words, when the Fed will announce its latest plans for raising interest rates.

The most important person in the markets right now will be hanging on every word from Federal Reserve Chairman Jerome Powell as he gives his thoughts and guidance on what’s to come.

Last year, the Fed hiked seven times, as it became abundantly clear that inflation was a problem that could will no longer be ignored,

final thoughts

In conclusion, it is clear that this is a big week, with the economy at a crossroads. Can the optimism persist that inflation has peaked? Or will the market be pulled down by a bigger than expected number shock?

The core inflation number may arguably be even more important than the headline number. Core inflation excludes the more volatile food and energy prices, with the assumption that these are less affected by monetary policy. Typically, this is the figure that policy makers often focus on.

With gas prices down from last year, the CPI figures will be boosted by the fact that these higher figures will be rounded out of the index with an additional month of data. Therefore, the main figure may take on even greater significance.

However, whatever the number, crypto markets will be watching precisely to decide whether or not to continue this 2023 rally.

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