CPI Catching the Crowd's Eye...

🇺🇸 The latest U.S. Consumer Price Index (CPI) report revealed higher-than-expected inflation, causing a sharp reaction in the cryptocurrency markets. The CPI rose by 0.5% month-over-month, bringing inflation to 3.0%, exceeding the forecast of 2.9%. Similarly, Core CPI, which excludes food and energy prices, increased by 0.4%, leading to a 3.3% annual rate, also surpassing expectations.

Initially, just before the CPI Report was announced, Bitcoin briefly dropping -2.1% to $94,250 before recovering slightly. This very well could have been some large insiders that were getting wind of the high inflation news ahead of time. However, prices quickly recovered to as high as $98,100 as retails were showing concern.

In terms of the social impact of this news, discussion rates about CPI reports across social media platforms—including X, Reddit, Telegram, 4Chan, Bitcointalk, and Farcaster—have reached their highest level in 15 months, reflecting traders' heightened sensitivity to any and all inflation-related news while markets are already so volatile.

The overall perception of the CPI report extended beyond crypto, affecting traditional financial markets as well. As we would expect, the crypto community is responding with some confusion and concern. Throughout 2023 and 2024, the Federal Reserve were confidently cutting interest rates, but made a surprise move to halt these cuts during the FOMC meeting in November, 2024.

Now that inflation numbers are concernedly high in the US, many are predicting that it will be quite a long time before we see further cuts, which traditionally benefit the markets. The rate rises in 2022, which were largely attributed to the massive crypto correction, are still fresh in peoples' memories. So watch for a growing level of FUD by retail traders that may start jumping out of crypto markets on a third straight disappointing Fed decision. Social volume charts like this one, which show the buying or selling trends of small traders, can be highly useful.

We have already been seeing a decline in total holders on the Bitcoin network, and this is generally a bullish signal. An ideal scenario would be for small traders to overreact to this news, allowing whales and sharks to scoop up more coins and send prices skyrocketing.

Based on the early price rebounds following the news, this may be shaping up to be a "sell the rumor, buy the news" scenario. As always, we will keep you posted on how the key stakeholders (those that matter most to crypto's market cap values) react. 👍

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Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.