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The cryptocurrency market, known for its sensitivity to macroeconomic events, has recently seen some volatility ahead of the release of key inflation data.
Inflation rose slightly in July, a measure favored by the Federal Reserve as it prepares to cut interest rates for the first time in more than four years.
The Commerce Department said Friday that the personal consumption expenditures price index rose 0.2% for the month and 2.5% from the same period a year ago, right in line with the Dow Jones consensus estimate.
Fed officials prefer to focus on core inflation, which is a better indicator of longer-term trends. On a 12-month basis, both core and headline inflation were unchanged from June.
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In recent days, policymakers such as Fed Chairman Jerome Powell have expressed optimism that inflation will return to the Fed’s 2% target.
Last week, the Fed chairman said that “the time has come to adjust monetary policy,” raising hopes of a rate cut at the central bank’s next meeting. Powell, however, declined to provide details on the timing and size of the cut.
Cryptocurrency market reacts
The cryptocurrency market fell as investors anticipated the latest round of inflation data. Several crypto assets are currently in the red. Bitcoin fell 2.97% in the last 24 hours; Ethereum, Shiba Inu, Solana, and Chainlink were posting losses between 3% and 6%.
FET, TAO, WIF and Floki showed significant losses between 7% and 18%.
Dow Jones reported that the Federal Reserve’s preferred inflation index rose 0.2% in July, matching economists’ expectations. The PCE index, a broad measure of how much consumers pay for a variety of goods and services, could offer a better indication of the outlook for interest rates.
In the coming days, market participants will be watching how the cryptocurrency market reacts to the recently released data. However, in the very short term, the cryptocurrency market is facing selling pressure.
