Crypto Market Volatility Set to Increase as US Inflation Soars


The US Consumer Price Index (CPI) saw a 0.1% increase in the month of November, resulting in a year-over-year rate of 3.1%, according to the Labor Department’s latest report on Tuesday. This was a slight deviation from the predictions of economists surveyed by Dow Jones, who had anticipated no change and a yearly rate of 3.1%. October’s flat US CPI reading was also followed by a slight decline in the annual rate, down to 3.2%.

On-chain data provider Santiment suggests that this development may lead to heightened volatility in the crypto market in the near future. Interestingly, Santiment notes that the amount of talk about a bear market is high and, historically, this kind of Fear, Uncertainty, and Doubt (FUD) usually precedes a market rebound.

At the time of writing, the Bitcoin (BTC) price has dropped by 2.1% and is trading under $41,000. The selling pressure is evident and there is a pullback under $40,000. According to Santiment’s on-chain data, there is a mild return of Bitcoin to exchanges which reflects the uncertainty of traders. On the other hand, the presence of Tether ($USDT) on exchanges has risen by 6.9% compared to six months ago, indicating a bullish sentiment in the market.

In the current market landscape of increased volatility, prominent crypto market analyst Ali Martinez has identified a robust support zone for Bitcoin between $37,150 and $38,360. This is supported by the involvement of 1.52 million addresses collectively holding 534,000 $BTC. Ali is also warning of two resistance walls that could hamper the BTC uptrend, located at $43,850 and $46,400.

In response to the recent Bitcoin price dip, there has been a noticeable surge in the number of entities holding 1,000 $BTC or more. This trend shows that major BTC whales are capitalizing on the price drop and are increasing their cryptocurrency holdings.

The Federal Reserve (Fed) is expected to announce that the current phase of policy tightening has ended, allowing for the possibility of future rate cuts. Futures markets are projecting a significant rate cut of up to 1.25 percentage points by the end of 2024, while the respondents of the CNBC Fed Survey are indicating a more gradual approach with around three cuts of quarter-percentage point increments.

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