Crypto markets fall as inflation data looms, Bitcoin holds firm above $60,500

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The total value of the crypto market fell more than 3% to $2.2 trillion in the past 24 hours as investors await the upcoming US inflation report, scheduled in less than two hours, according to CoinGecko data.

However, Bitcoin prices held firm above the $60,500 level in the hours leading up to the key event. Bitcoin had a volatile day on Wednesday, dipping below $62,000 before recovering to trade around $60,800 at the time of writing, according to CoinGecko.

Similar to Bitcoin, Ethereum has lost more than 2% in the past 24 hours, currently hovering around the $2,400 mark, with further declines in sight. In contrast to the volatile prices of Bitcoin and Ethereum, the US dollar strengthened ahead of the September CPI report.

Bearish sentiment prevails in the crypto market, with Aptos (APT), Near Protocol (NEAR), dogwifhat (WIF) and Optimism (OP) among the most affected assets over the past 24 hours. APT fell 9.5%, while NEAR, WIF and OP each fell 6%.

Upcoming CPI data is expected to show growth of 2.3% year-on-year, down from 2.5% in August 2024. CPI is expected to increase by 0.1% month-on-month , while the core CPI, which excludes food and energy prices, is expected to rise by 0.2%.

A deviation from the expected inflation report could increase market volatility and influence the Fed’s rate decisions. If the report shows inflation rising more than expected, it could lead to concerns about the need for the Fed to adjust interest rates, thereby increasing volatility in financial markets.

While the Fed’s monetary policy is influenced by inflation data, the latest decision, which cut interest rates by 50 basis points, indicates a response to deteriorating labor conditions rather than focusing solely on concerns about of inflation.

Analysts note that the Fed is increasingly concerned about the state of the labor market as job opportunities have dwindled and unemployment has gradually risen.

Analysts believe the Fed’s shift from focusing primarily on inflation to the health of the labor market could reduce the market impact of inflation data. However, some volatility could emerge from the CPI reports.

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