CPI data released last night came in higher than expected. Simply put, the CPI is a measure of how prices rise or fall.
CPI data came in higher than expected: the market had forecast September CPI at 3.6%, but the reported figure was 3.7%.
This means prices in the U.S. are rising, and inflation is higher than the market expected. If inflation doesn’t come down, rate cuts are unlikely in the short term, while the probability of rate hikes will increase.
The market is now widely expecting two rate hikes this year, possibly in October and December.
For global financial markets, rate hikes further drain liquidity. As a result, $940 million in positions were liquidated across the crypto market in the past 24 hours, including $870 million in long positions.
So why did this CPI reading come in above expectations?
The key factor is “energy” amid the situation in the Middle East. Since September, Brent crude has stayed near $100 for more than a month.
International oil prices aren’t coming down. The longer they stay high, the lower countries’ stockpiles get. Industries that depend on crude oil—including transportation, manufacturing, and automobiles—will all face rising costs.
For now, Trump doesn’t want to expand the conflict because of the midterm elections and is hoping to push oil prices down. But Iran has correctly read his thinking during the election period and is taking a harder line, expanding its control over crude oil imports and exports.
So, looking at the external environment, there really are many uncertainties. In particular, unexpected events and volatility could intensify as the midterm elections draw closer.
But when it comes to the crypto market, my view hasn’t changed: the trend has already reversed, and this is just a pullback.
During this period, especially, don’t use leverage or trade futures contracts. No matter how much you put in, this is like playing with fire—you’re more likely to lose it all than get out safely.
Focus on the long term and the trend.
That’s all for today. Let’s continue tomorrow.