Crypto Market Responds to Softer US CPIs with ETH Leading the Charge

Key Insights:

• Tuesday’s bearish crypto session spilled over to today’s morning session, with Binance Coin (BNB) leading the top ten in the red.
• An investor shift in focus to US inflation figures for July sent the top ten and the broader market into reverse.
• Investors responded to July numbers with a sharp rebound as US inflationary pressures softened.

It was a bearish morning session, with the total crypto market cap sliding to an early low of $1,053 billion. Through the morning, the crypto market recovered from lows ahead of the all-important US inflation figures.

With 30-minutes before the release, the total crypto market cap was down by $1.41 billion to $1,072 billion.

Investor angst over Fed monetary policy resulted in a greater interest in today’s US CPI numbers. Last week, US non-farm payrolls and the ISM Non-Manufacturing PMI led to the market’s pricing in a 75-basis point rate hike in September. A sharp pickup in inflation could force the Fed to deliver a more hawkish move, which would weigh on riskier assets.

Across the top ten by market cap, Binance Coin (BNB) led the way down, with a 2.25% loss.

Polkadot (DOT), Ripple (XRP), and bitcoin (BTC) were also in the red, while Ethereum (ETH) and Cardano (ADA) saw modest gains.

By contrast, the NASDAQ 100 Mini was up 54 points, with the markets betting on softer numbers.

US Inflation Comes in at 8.5%, Softer than Forecasts, and June’s 9.1%

According to the July report, the annual rate of US inflation softened from 9.1% to 8.5%. Economists forecast a rate of 8.7%. The energy index increased 32.9% for the 12 months ending July, which was softer than +41.6% for the period ending June.

The Consumer Price Index for all Urban Consumers was unchanged in July after rising by 1.3% in June. The gasoline index fell 7.7%, offsetting increases in the food and shelter indexes.

Crypto Market Rallies in Response to Softer than Expected US CPIs

The investor reaction to the softer US inflation figures was immediately evident.

In the minutes after the release of the CPI report, the crypto total market cap jumped from $1,070 billion to $1,102 billion, adding $32 billion in a matter of minutes before easing back.

Today’s inflation figures should remove bets of a percentage point rate hike and reduce the likelihood of a 75-basis point hike next month. While some caution is needed, with the Fed set for another round of numbers before the September FOMC meeting, the recent slide in crude oil prices currently supports a softer inflation outlook that is crypto market positive.

Looking across the crypto top ten, it was a sea of green as investors responded to the numbers.

At the time of writing, ETH was up 4.68% to lead the way. SOL (+2.91%), BTC (+2.36%), ADA (3.31%), and XRP (+1.93%) were also on the move.

BNB and DOT were also in the green, with modest gains of 0.46% and 0.47%, respectively.

In response to the CPIs, the NASDAQ 100 Mini was up 305.5 points.