Consumer Price Imagination
Cryptic ball: the Fed is winning.
It's CPI day today and the data just come out. Before the print, it seemed BTC and ETH had printed a higher low last night before the daily close, UTC time. Now, with YoY inflation at 8.5%, below the expected 8.7%, I'm confident we're going up.
- Why? The week was not inspiring much confidence until this moment. Stocks had been declining for four days in a row and today was going to be key to corner the naysayers and propel the current bounce - even it's just a dead cat.
- Note that, yesterday, Coinbase shared its Q2 earnings report so its stock was due to fall today at the market open. Why? The popular exchange posted a $1 billion-plus loss as its users are less interested in trading during downturns.
- If the US Consumer Price Inflation index had come above the expectation, as it did over the past months, it would strengthen the bears, now even more inclined to think only a recession could be the outcome of this economic mess.
- Fortunately, that wasn't the case and bitcoin pumped 3% in the 5 minutes after the inflation data was presented, just moments ago - an astonishing move in times like these. Ether appreciated 5%, as traders prefer the prime alt now.
- Stocks also pumped, with all major US indexes responding immediately to the good news. Remember what I explained on July 16: inflation is a problem but sustained high levels of it require massive underlying imbalances!
- While those are probably true in Argentina, experiencing 90% inflation, and while the West has definitely been printing more money than it should, it's just less likely we won't continue to see declining inflation from here.
Lastly, core inflation also came down against expectations and that's great news. I'm positive the market will continue to believe price increases have peaked and this will allow us to pump in August. As for September, that's another story - yet!
Chart art: recession lovers are losing.
Three things: PoS is winning.
- Ted helps you understand this week's CPI print. Great summary!
- Blocknative shows how Ethereum's blocks will work post-Merge.
- Barvadiya shares the "Ultimate DeFi derivatives resources".