- BTC and Ethereum soared after United States CPI data dipped beneath anticipations mom, on 12 January.
- Easing inflation suggests the Fed reduce rate hikes, helping crypto while weighing on the dollar.
- Today’s PPI release might have similar effects if stats indicate factory gate prices decline.
The latest United States PPI (Producer Price Index) data release, which gauges ‘factory gate’ prices, may substantially affect cryptocurrencies, including Bitcoin and Ethereum, upon its release later today (18 January).
Analysts view the econometric as a fore-warmer of further general CPI (Consumer Price Inflation) as it gauges the wholesale price or cost of produced goods.
Will U.S PPI Follow CPI Path
BTC and ETH enjoyed recoveries following the 12 January United States CPI data release, which indicated a sudden -0.1% month-over-month (MoM) dip in December. The data triggered declines in the United States dollar and rallies in riskier assets, including many large-cap cryptos.
That removes losses from FTX’s crash and the Gemini-DCG scandal, which have dented the cryptocurrency space since November. The question lingers, should we expect similar things upon United States PPI release later today? Moreover, how can the data impact cryptocurrencies?
PPI’s Effect on Cryptocurrencies and U.S Dollar
Analysts expect the United States Produce Price Index at 6.8% (yearly) and -0.1% monthly for December. However, the greatest effect on cryptocurrencies and the U.S. dollar will emerge from an unpredictable PPI surge. That’s because markets anticipate lower inflation after December CPI indicated an unexpected dip during the month. Thus, an increase will surprise the markets.
A substantially higher United States PPI that estimates (above 0.2% Y/Y or 0.1% mom) may lead to substantial rallies in the United States dollar and slumps in BTC and other crypto prices. That’s because it will confirm that the United States Fed might have to continue its rate hike aggressiveness to battle inflation. That will support the greenback, which has an inverse correlation with cryptos.
The PPI meeting estimates will have less impact on the prices, though the United States dollar may have a brief positive effect. At the same time, cryptos endure pessimism as the official research predictions are now somewhat outdated and don’t encompass the latest data, including the below-anticipated CPI release on 12 January.
BTC’s Chat Before the Data Release
BTC price witnessed a sharp rise in January 2023, following declines to a new low after November 2022’s FTX scandal. The dominant cryptocurrency has soared from the $15,479 mark on 21 November to 17 January’s new peak of $21,596.
Some indicators show that Bitcoin changed its near-to-medium term trend after surpassing the crucial 5 November peak of $21,473 – the final lower peak before Bitcoin bottomed – attained this week. The break represented a massive signal that the broad-based downside trend may be reversing.
January upsides saw Bitcoin breaking past all the critical Moving Averages – 50-, 100-, and 200-day SMAs. That cements the notion that the bellwether crypto could be halting its long-term downtrend. However, the RSI exceeds 70 on the 24hr chart, indicating overbought BTC conditions.
The RSI might exhibit overbought situations for a while before market pullbacks emerge. However, the specialist (Welles Wilder) who designed this indicator says unless the RSI escapes overbought and rejoins the neutral level (beneath 70), we may not expect massive sell signals.
Thus, the same-as-anticipated or lower-than-expected PPI would likely match the bullish stance in BTC’s charts. Nonetheless, considering the overbought conditions, the data might not have an impact or even a brief bearish effect if the PPI confirms lingering inflation. Prices rarely soar in straight lines, and enthusiasts can expect a slight correction in BTC price.