All eyes are set on US inflation data released this Thursday. The crypto market is moving sideways with few changes in the price of Bitcoin and altcoins. If inflation comes in hot, there could be more rate hikes coming.
The Consumer Price Index (CPI) measures the average price of goods and services consumers purchase. It is one of the most closely watched economic indicators, and it can have a major impact on the crypto market.
Crypto Market Eyes Inflation
If the CPI comes in lower than expected, it could provide much-needed relief to the market, leading to a soft landing on the next FOMC meeting. Experts forecast a rise in CPI data for July from 3% to 3.3% YoY. Apart from that, another CPI data report is set before the next FOMC meeting in September.
In other words, there are two chances that inflation data will pick up again, which could lead to a worst-case scenario for the financial markets, including the crypto market. The return of inflation fears could force another interest rate. In July, the Fed raised interest rates by 25 basis points, and the market currently anticipates no further rate hikes in September.
But this outlook could change. Consequently, a more aggressive tightening cycle could hamper economic growth and hurt asset prices. In the crypto market, such a scenario might trigger a sell-off. Investors should closely monitor the inflation data and its potential impact on the Fed’s future monetary policy decisions and market conditions.
Bitcoin Spot ETF Decision is Underway?
BlackRock ignited the Bitcoin ETF race, Greyscale might want to be the first to get the approval, but it turns out that Cathie Wood’s Ark Invest might be the chosen one.
In November 2022, the U.S. Securities and Exchange Commission (SEC) officially extended the deadline for approving the ARK 21Shares Bitcoin ETF. The asset management firm first filed for a Bitcoin spot ETF in May 2021.
According to the company’s document, the highly expected fund will be listed on the Chicago Board Options Exchange’s (CBOE) BZX Exchange once approved.
The SEC has twice extended the approval or disapproval period for crypto investment instruments, most recently in August 2022. Another delay happened in January this year.
The SEC assistant secretary Sherry Haywood stated that it was appropriate for the Commission to designate a longer period of time to issue an order approving or disapproving the proposed rule change to allow sufficient time to consider the proposed rule change and the matter raised in it.
Ark Invest initially partnered with Europe-based ETF issuer 21Shares to apply for a Spot Bitcoin ETF to be listed on the CBOE BZX Exchange in 2021. The SEC rejected the application in October 2021.
The SEC has never approved a U.S. spot crypto ETF to date but has greenlit investment instruments linked to BTC futures with funds from ProShares starting October 2021.
After the application was denied, digital asset manager Grayscale pursued legal action against the SEC, arguing its refusal to approve a BTC ETF was discriminatory. Other firms, including VanEck, have continued to pursue applications with the SEC for a spot crypto investment vehicle.
The SEC’s decision on the ARK 21Shares ETF is highly anticipated by the crypto community. If approved, it would be the first U.S. spot crypto ETF, allowing investors to buy and sell Bitcoin directly through a traditional ETF.
The SEC’s decision is also likely to have a significant impact on the broader crypto market. If approved, it could lead to a surge in demand for Bitcoin and other cryptocurrencies. However, if the SEC denies the application, it could dampen investor enthusiasm for the crypto market.
Many believe there will be another pushback from the regulators, at least for now.