Crypto market observers are keenly awaiting the delayed US inflation report for September, which is anticipated to be published on Friday. This report is expected to show inflation exceeding 3% for the first time in 2025, a development that could significantly impact crypto markets.
The US Bureau of Labor Statistics is scheduled to release the consumer price index (CPI) for September on Friday. The report's release was delayed due to the ongoing government shutdown, which has now entered its 24th day.
Economists forecast that inflation rose by 0.4% monthly and 3.1% annually in September. This would mark the first time the headline CPI has surpassed 3% this year, according to Trading Economics.
CPI Print Could Impact Crypto
The upcoming CPI report will be the first major data release since the US government shutdown commenced earlier this month.
Investor Ted Pillows commented that if the CPI comes in at 3.1% or higher, the likelihood of interest rate cuts could decrease. Conversely, if the figure falls at or below 3%, he anticipates it would be beneficial for the markets.
Analyst ‘Ash Crypto’ shared a similar sentiment, stating that a CPI print above 3.1% would be bearish for markets, as it would represent the highest CPI reading since June 2024. They noted that a figure around 3.1% would align with expectations, but a reading below 3.1% would represent the "perfect scenario for risk-on assets."
"Rate cuts will happen, and also the MoM increase in CPI will be just 0.1% or 1.2% annualized. This will also boost chances of more rate cuts and will cause liquidity to flow into risk-on assets."
Matt Maley, chief market strategist at Miller Tabak, told Bloomberg that while the Federal Reserve has stated its primary focus is on the employment landscape, any significant deviation of the CPI data from expectations could still influence their decision-making. He emphasized that the report would still have a substantial impact on the markets if it differs considerably from consensus predictions.
"So, it will still have a big impact on the markets if it is indeed out of line with what the consensus is thinking."
Despite potentially hotter-than-expected inflation figures, Barron's suggests that such data is unlikely to deter the Federal Reserve from proceeding with interest rate cuts. The central bank appears to be prioritizing the weakening labor market, and current CME futures prediction markets indicate a 98.3% probability of a rate cut next Wednesday.
However, the ongoing government shutdown could introduce complexities to the economic outlook leading up to the Fed's December meeting, where another rate cut is anticipated.
Markets March Marginally Higher
The overall crypto market capitalization has seen a modest increase of 1.8% over the past 24 hours, reaching $3.8 trillion.
Bitcoin (BTC) has spearheaded this upward movement, briefly surpassing $111,000 in late trading on Thursday before settling back to approximately $110,500 at the time of writing.