【Science Popularization】Why CPI Falling Short of Expectations Benefits Virtual Currency
I believe everyone has been inundated with the recently announced CPI. Here, I will educate everyone on what CPI data is and why a CPI that falls short of expectations benefits cryptocurrencies.
【What is CPI】 CPI stands for Consumer Price Index, which reflects the price index of goods commonly purchased by residents over a period of time. If the CPI index is 3.1%, it means that compared to last year, residents need to spend 3.1% more to buy the same goods. For example, if last year a phone cost 100 dollars, this year it costs 103.1 dollars.
【Why CPI is Important】 CPI actually represents the speed of inflation to a certain extent. Moderate inflation is beneficial for economic development, but if inflation is too fast, it can lead to a decline in purchasing power and a series of problems such as shrinking savings.
Therefore, the Federal Reserve will control CPI data through interest rate hikes or cuts. If CPI is too high, it indicates that there is too much money in the market; at this time, interest rate hikes prompt a considerable amount of capital to choose to buy government bonds or deposit in banks, which is why market liquidity decreases.
If CPI is too low, it indicates insufficient market liquidity. In this case, the Federal Reserve lowers interest rates, encouraging large sums of money to sell government bonds and withdraw from bank deposits, flowing into the market. This is why market liquidity increases.
【Why CPI Falling Short of Expectations Benefits Cryptocurrencies】 CPI falls short of expectations 👇 U.S. inflation situation is being suppressed, and market liquidity is insufficient 👇 The Federal Reserve cuts interest rates, increasing market liquidity 👇 Funds are withdrawn from government bonds or deposits 👇 Large amounts of money flow into risk markets 👇 U.S. stocks and risk assets like cryptocurrencies rise
CPI data skyrocketed! The expectation for interest rate cuts in the US has increased!
2.7% CPI, far below the market expectation of 3.1%, indicates that inflation in the US has been very effectively controlled, which provides very strong data support for the Federal Reserve's interest rate cut in January next year!
Market liquidity will be greatly released, and massive amounts of money will flow into the crypto market, $BTC $ETH $BNB will welcome a wave of strong growth!
Countdown to the release of U.S. CPI data in 10 minutes!
Institutions generally expect around 3.1%
If CPI < 3.1%, the cryptocurrency market will celebrate, and cryptocurrencies will see a surge
If CPI > 3.1%, the probability of a U.S. dollar rate cut decreases, market liquidity continues to be lacking, and cryptocurrencies may face a continuous decline