Investors continue to fall in the crypto market while waiting for US inflation data! Can there be a reversal if the data comes out positive?

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As investors await key U.S. inflation data, cryptocurrency markets have declined over the past 24 hours, and some speculation is that a potential dollar easing could provide an entry point for risk assets, including Bitcoin (BTC)** and altcoins.

Dogecoin leads the decline in the cryptocurrency market as investors monitor the US Dollar position

The cryptocurrency market experienced a 3% drop today in the face of significant asset losses ahead of the US Consumer Price Index (CPI) report to be released (CPI).

  • Bitcoin (BTC) down 1.3%,
  • Ethereum (ETH), Solana (SOL), Cardano (ADA) and XRP fell as much as 3%,
  • Dogecoin led the decline with a 4.5% drop (DOGE),
  • BNB's BNB on BNB Chain, outperformed the market by gaining 1% value with renewed interest in its ecosystem.

Investors are Watching CPI and Federal Reserve Actions

The US CPI tracks changes in the prices of consumer goods and services to measure inflation. Inflation trends tend to affect Bitcoin and other cryptocurrencies because some investors see them as a hedge against inflation.

Market analysts are predicting a monthly increase of 0.3% in CPI and an annual inflation rate of 2.9%, which could affect the Federal Reserve's monetary policy and potential interest rate cuts in 2025.

Relaxation in the Dollar Could Boost Crypto Prices

Some traders believe that if the CPI data indicates a possible interest rate cut, the USD may weaken and this could lead to the prices of risky assets such as cryptocurrencies rising.

“We conclude that the market is largely long on the dollar. Considering that the negative news is likely priced in, we believe that the USD is now facing a larger downside risk.” Singapore-based QCP Capital recorded this in a Telegram broadcast today.

QCP suggested that in the event of a significant weakening of the dollar, it could collectively loosen the positions of 'USD longs' and potentially send Bitcoin and altcoins higher.

"Tonight's CPI release could be the catalyst that triggers a (DXY) sharp decline in the U.S. Dollar Index," QCP added.

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