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Crypto market stable before U.S. CPI; signs of stability.

Economists expect higher U.S. CPI, but large companies are less worried about inflation, according to Factset research.

by V. Sinclair
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Bitcoin is currently trading at $25,933, experiencing a 0.66% increase in the last 24 hours. This comes as the release of U.S. CPI data approaches.

Despite some fluctuations in cryptocurrency prices earlier, digital assets have remained relatively stable. This is noteworthy as economists predict a slight rise in CPI growth for August compared to July.

Economists anticipate a 0.6% increase in U.S. CPI for August, up from July’s 0.2%. This rise is attributed to the escalating prices of oil, with WTI Crude Oil nearing its peak for 2023 at $89 per barrel.

However, core CPI is expected to slow down to 4.3% in August from July’s 4.7%. The CoinDesk Currency Select Index (CCYS) has also seen a modest increase of 1%, reaching 1,195.80. Meanwhile, ether remains steady at $1,593, despite a 2.2% dip in the past week.

Bernd Sischka, Chief Commercial Officer at PowerTrade, a crypto options and derivatives exchange, noted that the recent rally in prices was not necessarily driven by a genuine shift from bearish to bullish sentiments. Instead, it seemed to be fueled by aggressive short covering and a liquidity crunch, resulting in rapid and volatile price movements.

Sischka emphasized the need for a sustained bullish momentum in Bitcoin’s price, requiring a consistent close above critical resistance levels of $26,440 and $26,450. He suggested that the U.S. CPI release typically triggers more market volatility due to low overall orderbook liquidity.

In a separate development, the price of Curve’s CRV token is currently falling, trading at $0.39, down 3.3%. This decline is attributed to an influx of coins on exchanges, top holders reducing their holdings, and recent negative events in the protocol, including a DeFi exploit and the founder’s significant token sale.

According to FactSet research, inflation concerns appear to be less of a worry for companies. The number of S&P 500 companies mentioning “inflation” during their Q2 earnings calls has declined. Only 296 companies cited the term, marking the lowest since Q2 2021 and the fourth consecutive quarter of decline. However, this figure still exceeds the 5-year average of 217 and the 10-year average of 168.

FactSet analysts found that companies mentioning “inflation” during their Q2 earnings calls experienced weaker stock price performance in recent months compared to those that did not.

Arthur Hayes, the founder of BitMEX and current Chief Investment Officer at Maelstrom, argued during a keynote at Korea Blockchain Week that the relationship between CPI, inflation, and crypto prices is not what it used to be. Despite the Federal Reserve’s aggressive rate hikes aimed at countering inflation, bitcoin and other risk assets have shown unexpected resilience. Hayes believes that these rate hikes, paradoxically, have stimulated spending and nominal GDP growth, leading to economic growth.

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