The crypto markets have witnessed a big blow in recent weeks but they could see a relief rebound on Wednesday if U.S. inflation data are positive.
The total market capitalization of cryptocurrency has dropped by about $500 billion in the last week and is now hovering at $.14 trillion. Major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) have also significantly consolidated, and are currently trading near their 2022 lows.
However, if April U.S. inflation data comes in within estimates later in the day, this trend could reverse. Following their recent drop, major cryptos are trading at reasonable prices, positioning them for a comeback.
Positive U.S. CPI Could Trigger Crypto ReboundÂ
According to data from Investing.com, the U.S. Consumer Price Index (CPI), which measures the prices paid by consumers for certain goods, is expected to show a reading of 8.1% later today, down from 8.5% in March.
A verified drop in the CPI data could indicate that inflation in the United States has peaked and that the Federal Reserve will not hike rates too quickly to keep inflation under control. This scenario is predicted to be mostly positive for risk-driven markets, such as crypto. The current crypto meltdown was triggered by the Fed’s rate hike earlier in May.
However, a reading that is higher than predicted, or perhaps above March’s levels, might spark a new round of selling in the market. The reading is due at 8:30 a.m. EST.
Due to a lengthy period of loose policy and immediate shocks from the Russia-Ukraine war, the US CPI is moving at a 40-year high as of March. Fuel and food prices are two of the most significant drivers of this increase.
Bitcoin and other tokens are in hovering before CPI
Bitcoin, like the rest of the crypto market, appears to be moving ahead of the CPI data. Traders were holding off on placing huge bets after the reading given that the market may go either way.
For the last two days, Bitcoin has been hanging around $30,000, while Ethereum has been sitting slightly below $2,500. This week, both tokens fell to 2022 lows.
Terra (LUNA) is, by far, the worst performer in this crash. The de-pegging of the UST token resulted in LUNA losing over 90% of its value, with traders continuing to dump the token.
