Every economic development in the US has the potential to impact the cryptocurrency market, with inflation being a significant factor. Some key inflation indices will be released soon. These indices can influence market sentiment and asset allocation. Understanding how these indices influence market dynamics is crucial to anticipating changes in crypto investment behavior.

1. US Inflation Indices: A Brief Introduction

US inflation indices measure changes in the prices of goods and services over time. They provide valuable data for understanding inflationary trends in the economy. These indices help policymakers, businesses and individuals assess the rate of inflation and its impact on purchasing power and general economic stability.

2. Main inflation indices will be released soon

Here are the main inflation indices to be released this month.

• US Core Inflation Rate MoM

It measures the monthly change in global prices, excluding volatile food and energy costs, providing information on underlying inflation trends.

• US core inflation rate over the previous year

It tracks the annual change in core inflation, offering a long-term view of price stability, unaffected by short-term fluctuations in food and energy prices.

It reflects the monthly variation in global consumer prices, including food and energy products, capturing short-term fluctuations in inflationary pressures.

It indicates the annual variation in global consumer prices, providing a broader perspective on inflation trends, inducing long-term effects.

It measures the average change over time in the prices paid by urban consumers for a basket of goods and services, representing the overall cost of living.

Seasonally adjusted version of the CPI, eliminating the effects of seasonal variations, offering a clearer view of underlying inflation trends.

It monitors changes in prices received by producers of goods and services, serving as an indicator of inflationary pressures in the production process.

Measures monthly variation in producer prices, providing information about short-term fluctuations in input costs for producers.

It indicates the monthly change in producer prices, excluding volatile food and energy costs, offering a clearer picture of the underlying inflationary pressures on production.

Tracks the annual change in basic producer prices, providing a long-term view of inflationary trends in the productive sector, unaffected by short-term fluctuations.

3. Historical analysis of the main inflation indices

Let’s do a historical analysis of each inflation index.

3.1. US MoM Core Inflation Rate: Historical Analysis

At the start of the year, in January 2024, the US core inflation rate was around 0.392%. There was a drop in February, to 0.358%. In March, it increased slightly to 0.359%. The forecast is that it will be 0.3% this month.

3.2. US Core Inflation Rate Year-over-Year: Historical Analysis

At the start of the year, in January 2024, the US core inflation rate was around 3.9%. In February, it fell to 3.8%. In March, there was no change, remaining at around 3.8%. It is expected to fall further to 3.7%.

3.3. US Monthly Inflation Rate: Historical Analysis

As of January 2024, the US inflation rate is around 0.3%. There was a big increase in February, when it went from 0.3% to 0.4%. In March, there was no change, remaining at 0.4%. The forecast is that this month it will fall to 0.3%.

3.4. US inflation rate over the previous year: historical analysis

In January 2024, the US inflation rate year-on-year stood at around 3.1%. It increased slightly to 3.2% in February. In March, it increased sharply to 3.5%. The forecast is that it will remain at the level of 3.5% this month as well.

3.5. US CPI: Historical Analysis

As of January 2024, the US CPI is around 308,417 points. Since then, it has grown consistently. In February it reached the mark of 310,326 points and in March it reached the level of 312,332 points. The forecast is that it will exceed 313.9 points this month.

3.6. US CPI sa: Historical Analysis

As of January 2024, the US CPI is almost 309,685 points. Since then, the rate has steadily increased. In February, it surpassed the mark of 311,064 points. In March, it reached a level of 312.23 points. The forecast is that the trend will continue, taking it to the mark of 313.2 points.

3.7. US PPI: Historical Analysis

As of January 2024, the US PPI is approximately 142,676 points. In February, it registered a sharp increase, when it rose from 142,676 to 143,466 quickly. The trend also continued in March, when it reached the level of 143,687 points. The forecast is that there will be no change in the trend and it will reach the level of 143.9 points.

3.8. US PPI MoM: Historical Analysis

As of January 2024, the US monthly PPI is almost 0.4%. In February, it increased sharply to 0.6%. Conversely, in March there was a sharp drop, when it went from 0.6% to 0.2%. The forecast is that it will remain in the range of 0.2% this month as well.

3.9. US PPI MoM Core: Historical Analysis

In January 2024, the monthly US PPI index reached 0.5%. Since then, it has been steadily declining. In February, it fell to 0.3%. In March, it reached 0.2%, marking a sharp drop compared to January’s 0.5% range. The forecast is that this month it will also be in the range of 0.2%.

3.10. US Core PPI YoY: Historical Analysis

In January 2024, the US core PPI year-on-year was almost 2%. Since then, it has been steadily increasing. In February, it reached 2.1%. In March, it reached 2.4%. The forecast is that this time it will be in the range of 2.4%.

4. US Inflation Indices Conveying the Future Prospects of Cryptocurrencies: A Predictive Analysis

Historical analysis of key inflation indices in the US provides valuable insights into the future prospects of the crypto market. Looking at trends:

• US Core Inflation Rate MoM and YoY

Stable underlying inflation rates indicate economic stability. If the upcoming rates match the prediction, this will likely maintain confidence in the crypto market. However, if rates were to decrease, it could lead to a slight decrease in enthusiasm for cryptocurrencies as a hedge against inflation. On the other hand, a rise could stimulate demand for cryptocurrencies, particularly as a hedge against inflation, potentially driving up prices.

• US Inflation Rate MoM and YoY

As with underlying inflation, global inflation rates show stability. If the upcoming rates align with the forecast, it would likely maintain confidence and stability in the crypto market. A decrease in inflation rates could have a slight dampening effect on enthusiasm for cryptocurrencies, while an increase could reinforce the appeal of cryptocurrencies as a hedge against inflation, potentially increasing demand and price.

Consistent growth in the Consumer Price Index signals healthy demand. If the upcoming CPI levels meet the prediction, it would mean continued growth and stability in the crypto market. A decrease in CPI levels may indicate an economic slowdown, leading to slight corrections in cryptocurrency prices. On the other hand, rising CPI levels could strengthen the case for cryptocurrencies as a hedge against inflation, potentially increasing demand and prices.

The mixed trend in the Producer Price Index suggests economic uncertainty. If upcoming PPI levels match the prediction, uncertainty in the crypto market could persist. A decrease in PPI levels could increase investor confidence in cryptocurrencies, leading to moderate price increases. Conversely, an increase in PPI levels could increase uncertainty, triggering cautious investment and potential shifts to more stable assets.

Stability in the Basic Producer Price Index indicates confidence in economic fundamentals. If the upcoming Core PPI levels align with the forecast, it would likely bolster confidence in the crypto market. A decrease in core PPI levels could ease inflationary pressure, resulting in moderate adjustments in cryptocurrency prices. On the other hand, a rise could raise concerns about inflationary risks, potentially impacting cryptocurrency demand and prices.

Final grade

In short, the future prospects of the crypto market are intrinsically linked to the trajectory of inflation indices. Stable or forecast-aligned inflation rates could support investor confidence in cryptocurrencies, promoting a relatively stable market environment. However, deviations from predicted levels, whether upward or downward, can introduce volatility and uncertainty into the crypto market, influencing investor sentiment and asset prices accordingly.

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