Will inflation data trigger a sell-off?

The crypto economy has exploded by $623 billion in just seven months! Bitcoin's market value rose by over $20,000, while Ethereum gained more than $470. However, the crypto market is on high alert as it awaits several important events, including the release of the US personal consumption expenditure (PCE) inflation data and remarks from Federal Reserve officials. These events are expected to significantly affect market sentiment and could potentially influence the Federal Reserve's upcoming decisions regarding interest rate cuts.

What lies ahead? Let's find out.

These events could determine the market’s next move

Recent comments from Federal Reserve officials, including Fed Chair Jerome Powell, have fueled optimism in the market and hint at a possible loosening of monetary policy. This dovish stance has led to increased expectations of a rate cut in September, which has already led to a strong rally in the crypto market.

The uptrend continued, with Bitcoin crossing the $65,000 mark over the weekend and Ethereum approaching the $2,800 mark. Statements from San Francisco Fed President Mary Daly and Atlanta Fed President Raphael Bostic are likely to provide important clues, but the market remains in a state of fear and trepidation. Any hint of a hawkish stance could trigger a sell-off in the financial and crypto markets.

US PCE inflation data: An important indicator

The upcoming US PCE inflation numbers are crucial. Market estimates are forecasting a slight increase to 0.2% in July, up from 0.1% in June. Core PCE is expected to remain stable at 0.2% each month, but could rise to 2.7% year-on-year.

These numbers will be closely watched as they will influence the Federal Reserve's decision-making process, especially with regard to the potential rate cut in September. A higher than expected inflation rate could dampen the recent bullish sentiment in the crypto market.

Revised GDP data: Another critical event

In addition to the PCE data, the second revision of the US GDP data for the second quarter, scheduled for release on August 29, will also be a key focus. This data could provide further insights into the overall economic health of the US and have a significant impact on the stock and crypto markets.

Current market outlook

The recent gains in the crypto market are fueled by the Fed's dovish stance. However, markets are cautious ahead of the PCE data and Fed statements. These events could strengthen the rally or cause instability, highlighting the importance of carefully examining the current market.

The fate of cryptocurrencies depends on political decisions

In the long term, politics will play a crucial role, but before that, the Fed's decision to cut interest rates in September could cause short-term volatility. So far, only Donald Trump has openly spoken out in favor of cryptocurrencies, while others like Kamala Harris have taken a diplomatic stance. Whatever the future holds, cryptocurrencies will see some big changes this year.

Also read: Bitcoin News: Is BTC Price Preparing for a Major Rally? Fed Rate Cut Sparks Excitement

What are your predictions for the crypto market after the September event?