U.S. CPI data, the U.S. CPI data for a certain month are not seasonally adjusted. Basically, May data is released in June, and April data is released in May. CPI is the abbreviation of Consumer Price Index in English. It is a price change indicator based on the prices of products and services related to residents' lives. It is usually used as an important indicator to observe the level of inflation. The level of this data compared to the previous value will directly show the situation of the U.S. economy and will also affect the rise and fall of the U.S. dollar index. At the same time, the level of the CPI index also determines the Fed's macroeconomic adjustment policy for the U.S. economy, whether it is raising interest rates, suspending interest rate increases, or cutting interest rates.
As the world's largest economy, the U.S. dollar is also the world's most liquid legal currency and plays a vital role in the global financial system. The performance of the U.S. economy will directly affect the rise or fall of the U.S. dollar, as well as the tightening and easing of the global economy. Although global finance has been getting rid of the influence of the US dollar in recent years, there is still a long way to go to achieve complete de-dollarization. At present, the performance of the U.S. economy still has a profound impact on the global venture capital market. Among them, the biggest impact is on gold, crude oil, futures stock market, and finally the crypto market.
In the field of investment, gold and crude oil have escaped the category of risk investment due to their original nature, while futures, stock markets, and crypto markets are still higher-risk investment fields. The basic order of risk from low to high is stock market, futures, and crypto. market. The impact of the U.S. economy on these investment types is profound, which also leads to the release of U.S. CPI data every time, which will bring greater fluctuations to the investment market.
What impact does US CPI have on the investment market?
Because the individual values of CPI data cannot be illustrated by examples, we use this month’s May CPI data as an example.
When the CPI data in the United States decreases from the previous value, it means that inflationary pressure is relatively small. In this case, the impact on the venture capital market may be manifested in the following aspects:
Interest rate policy:
Lower CPI data may make the Federal Reserve feel that inflationary pressure is not strong, so it may maintain lower interest rates. A low interest rate environment generally has a positive impact on risky assets, such as stocks and other high-yielding investments, because low interest rates make financing cheaper and encourage business expansion and consumer spending.
Investor confidence:
Slowing inflation may boost investor confidence in the economic outlook, spurring capital inflows into the venture capital market. Investors are likely to put more money into stocks, high-yield bonds and other riskier assets.
Monetary policy expectations:
If the CPI data shows lower inflationary pressures, investors may expect that the Fed will not implement tightening monetary policy in the short term. This could benefit the venture capital market, as tighter monetary policy typically causes market interest rates to rise, negatively impacting risky assets.
Re-looking at this month's CPI index, the previous value was 4.9 and the expected value was 4.1. If the announced value is greater than the predicted value, it will be good for the US dollar index. Let me focus here. Has anyone around you ever told you that a good US dollar index will be bad for the investment market? Not really. What data to look at. If the announced expected value is greater than the expected value, it will be good for the US dollar index. However, as long as it does not exceed the previous value, the overall CPI is still in the process of decreasing, which proves that the economic pressure is smaller than the previous period and the low interest rate level will continue to be maintained. On the contrary, it will stimulate investors to invest funds in the investment market, including the venture capital market. At the same time, the slowdown in inflation will increase investor confidence and stimulate new blood to join. It also shows whether the monetary policy is loose or not. Loose policies will also benefit the investment market.
Compared with today's announced value, it is lower than expected, which is bad for the US dollar and good for the investment market. Therefore, judging the market trend is not a simple matter. The investment market is not directly related to the U.S. dollar index and other investment markets, but there are also intricate reference relationships. These are the basis for our analysis, and the same data is different in some different situations. Time will also have different reference effects, so don't listen to other people's deception and directly determine a value to judge the rise and fall of the investment market. If a piece of data can analyze the rise and fall of the market, what is the use of professional analysts?
After talking about the venture capital field, let’s talk about the impact of CPI on the encryption market. My conclusion is that it has an impact, but the impact is not big, and the impact will become smaller and smaller.
Why do you say that? Because the crypto market is a newcomer in the venture capital market, its overall size is still smaller compared to the stock market and the futures market. At the same time, venture investors are serious about investing and are ranked last. CPI data stimulates investors' desire to invest. They will first choose the stock market, futures, and finally the crypto market. When the global investment market is enthusiastic, the positive CPI data may quickly react to the encryption market because investors are active. However, if the global investment sentiment is sluggish, the impact on the encryption market will be much weaker, just like tonight , the data is very good, but the market is lonely.
In fact, whether it is CPI data or non-farm payrolls, their impact on the encryption market is gradually weakening. There are two factors in this:
One is the gradual de-dollarization of the global economy, which is weakening the impact of the U.S. dollar on major economic systems and at the same time attenuating the impact of the U.S. economy on financial markets in a disguised manner. This is the general trend. The U.S. economy is currently in decline, and its debt is high. Sooner or later, there will be a thunderstorm. The major economic systems around the world also know very well that they cannot allow the United States alone to cause a heavy setback to global finance.
The second is that the encryption market is different from other investment markets. This market is a market of speculation. Market sentiment, market behavior, local policies, geopolitical policies, etc. all determine its direction. A simple piece of data may give The market brings fluctuations, but it is impossible to fully predict the trend in the future.
To sum up, the U.S. CPI index will currently bring fluctuations to the crypto market, but the extent of the fluctuations depends on the actual market environment and must be judged based on current trading volume, market sentiment, etc. For example, tonight's CPI data, I was prepared for small fluctuations, but it still exceeded expectations. The fluctuation was more than 400 points, which is not worth mentioning for BTC. This small fluctuation is due to the sluggish trading volume in the market. Without enthusiastic investors and no one to speculate on this good news, there will not be much fluctuation. On the contrary, during the enthusiastic trading stage, there will be larger fluctuations. , but it is just a fluctuation. As mentioned above, to judge the rise and fall of the crypto market, we must look at it comprehensively, including U.S. data, market behavior, geography, and local policies. If someone deceives you again in the future, and this line, the Bollinger Bands, the index and the indicators determine the market trend, you can go back and give him two big bucks. Technology, news, and market sentiment are all considered comprehensively. It can't be so simple to judge accurately with just a few points of coverage. If you are not convinced, you can refer to the ARPA LINA published some time ago and ask if you are convinced? I'm convinced.
In any investment field, the most important thing to do is to improve your awareness. If your awareness is not enough, you will not be able to analyze anything even if you are given key information. It’s easy to be fooled, so I would like to give you a final message: investment is risky, so be cautious when entering the market!
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