Friday's Inflation Report: The Key to Unlocking Bitcoin, XRP, ETH, and SOL Price Movements
Coindesk3 hours ago
810

Friday's Inflation Report: The Key to Unlocking Bitcoin, XRP, ETH, and SOL Price Movements

Market Sentiment
inflation
bitcoin
cryptocurrency
volatility
fed
Share this content:

Summary:

  • Core PCE inflation likely rose to 2.9% in September, above the Fed's 2% target for 55 straight months, potentially strengthening hawkish views on rate cuts.

  • Bitcoin's implied volatility index (BVIV) is at 36%, indicating a normal 1.88% expected price swing, with low volatility due to anticipated Fed rate cuts.

  • A softer inflation report could lower the 10-year Treasury yield below 4%, helping Bitcoin break out of its $92,000-$94,000 trading range.

  • Ether, Solana, and XRP show higher volatility indices, with expected price swings of 3%, 3.86%, and 4.3% respectively, indicating greater sensitivity to the inflation data.

  • Analysts warn that any decline in yields might be short-lived, emphasizing the importance of the Fed's upcoming decisions on market direction.

The Federal Reserve's preferred inflation gauge, core PCE, is expected to show a rise in September, moving away from the Fed's 2% target. According to FactSet, it likely increased by 2.9% year-on-year, marking 55 consecutive months above the target. This sticky inflation could bolster Fed hawks advocating for slower rate cuts.

Despite this, volatility indices indicate no major turbulence. Volmex's annualized one-day bitcoin implied volatility index (BVIV) hovers around 36%, suggesting a 24-hour expected price swing of 1.88%, which is within normal ranges. Low volatility expectations are likely due to anticipated Fed rate cuts next week, with CME's FedWatch tool pricing a 25 basis point cut on Dec. 10 as a done deal.

BTC's price chart. (TradingView)

A softer-than-expected inflation report could push the 10-year Treasury yield below 4%, potentially helping Bitcoin break out of its current trading range of $92,000-$94,000. Iliya Kalchev, a Nexo Dispatch analyst, noted that a softer labor read and contained PCE would reinforce the easing narrative, supporting crypto's rebound, while any upside surprise might keep markets range-bound until the Fed clarifies its path.

However, analysts at ING have warned that any decline in the benchmark yield could be short-lived.

The data could similarly impact alternative cryptocurrencies. Ether's one-day implied volatility index is at 57.23%, implying a 3% price swing, slightly higher than Bitcoin. Solana's volatility index signals a 3.86% move, with XRP at 4.3%.

Comments

0

Join Our Community

Sign up to share your thoughts, engage with others, and become part of our growing community.

No comments yet

Be the first to share your thoughts and start the conversation!

Newsletter

Subscribe our newsletter to receive our daily digested news

Join our newsletter and get the latest updates delivered straight to your inbox.

BitcoinToday.app logo

BitcoinToday.app

Get BitcoinToday.app on your phone!