Since March 20th, cryptocurrency investors have been experiencing a nightmare. However, there may finally be a glimmer of hope on the horizon. The latest inflation data suggests progress towards the 2% target, albeit with some delay. Additionally, there is an increased likelihood of interest rate cuts starting in September.
The monthly Consumer Price Index (CPI) for April came in at 0.3%, surpassing the expected 0.1%. While annual headline and core inflation met expectations, there has been a noticeable decline in annual inflation, with core inflation reaching its lowest level since 2021. Despite this positive news, not everyone is satisfied. The Kobeissi Letter expressed its concerns regarding the latest market developments.
Unfortunately, the data from CME Group’s FedWatch tool is not encouraging. Investors who initially anticipated a 150 basis point cut at the beginning of the year, with the first cut expected in March, have significantly revised their expectations. The probability of rate cuts in June is now only 3.1%, increasing to 28.3% in July.
We previously highlighted the importance of closing above $65,000 for further technical increases in the cryptocurrency market. Following the release of the inflation data, the price of Bitcoin is hovering around the $66,000 mark, having recently reached $65,986. The outlook in the exchange order books has also shifted after the data, with buyer liquidity concentrated above $65,000, according to data from CoinGlass.
Cryptocurrency analyst Skew predicts that if the $65,000 level is maintained, the price of Bitcoin could continue to rise towards $70,000 and even $73,777. However, there are still obstacles to overcome. The Securities and Exchange Commission (SEC) is set to announce its final decision on spot ETH ETF applications on May 23rd and 24th, or possibly earlier.
If the SEC announces a decision against these applications, a normal decline in Ethereum (ETH) and other altcoins is expected. However, if the SEC rejects all applications, including BlackRock’s, it could trigger even larger losses. Given the SEC’s previous actions during the Bitcoin (BTC) ETF process, it is highly unlikely that approval will be granted after the recent lawsuits.
Investors should be cautious and conduct their own research as the information provided in this article does not constitute investment advice. Cryptocurrencies are known for their high volatility and associated risks.
