BTC vs. CPI
Updated
With BTC SPX correlation at all time high level, the impact of inflation on BTC prices increase accordingly. Unfortunately, supply side shortages make it tough for the Fed to deal with the inflation issues at hand. So I wouldn’t be calling the bottom now even with lots of on-chain metrics at historical oversold levels.
Most crypto traders are more focused on the FOMC results rather than the inflation data, but in reality, inflation data is crucial for the FOMC decision. Below is the timeline for what happened in June.
- June 9th: 4% probability for 75bps rate hike; 96% probability for 50bps rate hike
- June 10th: May CPI data released (actual > estimate by 0.3%)
- June 10th – June 14th: probability for 75bps rate hike surged from 4% to 94%
- June 15th: Fed raised rate by 75bps
The majority of the 30k to 20k BTC drop happened before the FOMC (June 14-15th) and after the CPI data release (June 10th).
If we look at the differential between estimated and actual CPI data, it’s interesting to see that BTC has faced tough market conditions when the actual data beats the estimated inflation data. Current estimate for June sits at 1.1% MOM and 8.8% YOY.
11 more hours till the next CPI data release. 14 more days till next FOMC. Tick tock.
Most crypto traders are more focused on the FOMC results rather than the inflation data, but in reality, inflation data is crucial for the FOMC decision. Below is the timeline for what happened in June.
- June 9th: 4% probability for 75bps rate hike; 96% probability for 50bps rate hike
- June 10th: May CPI data released (actual > estimate by 0.3%)
- June 10th – June 14th: probability for 75bps rate hike surged from 4% to 94%
- June 15th: Fed raised rate by 75bps
The majority of the 30k to 20k BTC drop happened before the FOMC (June 14-15th) and after the CPI data release (June 10th).
If we look at the differential between estimated and actual CPI data, it’s interesting to see that BTC has faced tough market conditions when the actual data beats the estimated inflation data. Current estimate for June sits at 1.1% MOM and 8.8% YOY.
11 more hours till the next CPI data release. 14 more days till next FOMC. Tick tock.
Note
June CPI 9.1% (1.3% MOM, 0.2% higher than estimate). In the chart above, this is equivalent to an orange circle. The probability for 100bps rate hike was less than 10% two days ago, now the probability is at 80.3%.
Be careful. These tell me the current rally will be short lived.
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