đăOn-Chain Class â§ăCPI/PPI both come in red-hotâare rate-hike expectations back? Beginnersâ guide to the âinflation â interest rates â crypto pricesâ chain
The past two days have taught the market another lesson: September CPI came in at 3.7%, above expectations, while PPI rose 6.3% year over year (versus expectations of 5.3%, the biggest year-over-year increase since March 2022). After both inflation reports came in red-hot, $BTC fell from around $84,000 to $80,200, marking another monthly low, while liquidations over 24 hours surged to about $938 million. Prices have bounced back this morning, returning to around $82,400.
A lot of people are asking: what exactly is the relationship between inflation data and crypto prices? Todayâs lesson breaks down this chain.
Link one: Inflation â the Fed. The Fedâs CPI target is 2%. At 3.7%, inflation is still far from that target, which means monetary tightening may last longer. After each CPI/PPI release, the question traders care about most is, âWill the Fed raise rates again?â
Link two: Interest rates â risk assets. Rate hikes = higher risk-free returns = less appeal for risk assets. The key is the âexpectations gapâ: if the market initially priced in just a 20% chance of a rate hike, but that rises to 80% after the data is released (as prediction markets have indicated), prices have to factor in that new information all at once. Thatâs why markets often swing sharply the moment CPI is released.
Link three: How can beginners track this themselves? Just remember these three things:
1⣠Data source: The U.S. Department of Laborâs BLS website publishes CPI/PPI monthly, with forecasts and actual figures side by side;
2⣠Expectations tools: CME FedWatch and Polymarketâcheck the âprobability of a rate hike at the next meetingâ;
3⣠The pattern: Actual figures above expectations = rising hawkish expectations = bearish in the short term, and vice versa.
Now letâs look at smart money: On October 14, U.S. spot Bitcoin ETFs saw net outflows of $261.4 million in a single day, after inflows the day before. Institutional investors pulled back when the data came in red-hot, waiting for sentiment to cool. Technically, $BTC is testing the $80,000 psychological level, with the area around $78,000 as the next line of defense.
After reading this, can you explain the âinflation â interest rates â crypto pricesâ chain in your own words? Share your thoughts in the comments đ
â ïž Personal opinion. DYOR and be aware of the risks.
#æŻçčćž #仄ć€Șć #ć æŻ #CPI
The past two days have taught the market another lesson: September CPI came in at 3.7%, above expectations, while PPI rose 6.3% year over year (versus expectations of 5.3%, the biggest year-over-year increase since March 2022). After both inflation reports came in red-hot, $BTC fell from around $84,000 to $80,200, marking another monthly low, while liquidations over 24 hours surged to about $938 million. Prices have bounced back this morning, returning to around $82,400.
A lot of people are asking: what exactly is the relationship between inflation data and crypto prices? Todayâs lesson breaks down this chain.
Link one: Inflation â the Fed. The Fedâs CPI target is 2%. At 3.7%, inflation is still far from that target, which means monetary tightening may last longer. After each CPI/PPI release, the question traders care about most is, âWill the Fed raise rates again?â
Link two: Interest rates â risk assets. Rate hikes = higher risk-free returns = less appeal for risk assets. The key is the âexpectations gapâ: if the market initially priced in just a 20% chance of a rate hike, but that rises to 80% after the data is released (as prediction markets have indicated), prices have to factor in that new information all at once. Thatâs why markets often swing sharply the moment CPI is released.
Link three: How can beginners track this themselves? Just remember these three things:
1⣠Data source: The U.S. Department of Laborâs BLS website publishes CPI/PPI monthly, with forecasts and actual figures side by side;
2⣠Expectations tools: CME FedWatch and Polymarketâcheck the âprobability of a rate hike at the next meetingâ;
3⣠The pattern: Actual figures above expectations = rising hawkish expectations = bearish in the short term, and vice versa.
Now letâs look at smart money: On October 14, U.S. spot Bitcoin ETFs saw net outflows of $261.4 million in a single day, after inflows the day before. Institutional investors pulled back when the data came in red-hot, waiting for sentiment to cool. Technically, $BTC is testing the $80,000 psychological level, with the area around $78,000 as the next line of defense.
After reading this, can you explain the âinflation â interest rates â crypto pricesâ chain in your own words? Share your thoughts in the comments đ
â ïž Personal opinion. DYOR and be aware of the risks.
#æŻçčćž #仄ć€Șć #ć æŻ #CPI