The CPI sets the pace

As in previous months, the market is attentive to macro news, which is what is setting the pace and the evolution of prices. In our strategy, we used to focus on central bank meetings as reference news and some labor market data, as is the case of the NFP USA

But this scenario has changed a few months ago with the appearance of inflation. With price increases not seen since the 1980s, without a doubt, the news that capitalizes on the market’s attention is the evolution of prices

Prices in the US still do not respond to FED stimuli

Yesterday we had the publication of the year-on-year US CPI data, and the data has not been as good as expected. And this is a very important piece of information, since the FED has already made it clear that it is going to lower inflation at whatever price.

The shock monetary policies that have been implemented so far have had a slight effect on the rise in prices, which does not seem to slow down their rise. It is already placed at 8.2%

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Forecasts for this month were one tenth lower. Beyond the data, what the market values is the verification of the effectiveness of the monetary policy measures, with the fear that the FED will intensify the restrictions on liquidity.

Although it is true that prices have moderated compared to the previous month, they have done so in a smoother way than expected, leaving the reduction in one tenth percentage compared to the two tenths expected in this period

Influence of macroeconomic data on crypto assets

Although this data was unimportant for the crypto assets market just a year ago, the scenario has changed radically. We could look for the origin of this change in:

  1. A modification of the market structure with the entry of institutional capital that operates under other premises and parameters and considers crypto assets as one more asset in the portfolio.
  2. The change in the macroeconomic context with a drastic reduction in liquidity in the traditional market

The reality is that we are facing a new context, as we have been repeating in different analyses, and it will be very important to analyze the differences in the behavior of crypto assets compared to previous periods.

This reminds us of the great uncertainty that extrapolating market data and behaviors based on historical data entails at this time

Bitcoin and Ethereum: figure back in V

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Within this context, the macroeconomic data has been like a shock in the market, which leaves us with a figure known as a V-turn, without a doubt one of the most dangerous market situations that we can experience in the world of trading.

In this type of market context, it is very easy that if you have open positions the stops are jumped, and on top of that you end up opening a position in the opposite direction to the market than the previous one. Many times, the market after this movement is sideways, so we take the loss of the trade that we had open and we are left with a new position that has been opened based on a market situation that has changed rapidly

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We can apply the same reasoning to the ETH graph where we can see exactly the same figure

This is a dangerous event for traders as we have mentioned, and many times unpredictable. One of the precautions we must take is to always examine the economic calendar and try to identify these potential situations. The same in these cases it may be advisable to be out of the market, especially in a period like the current one in which these events cause so much volatility and so much anarchy

The rest of the market joins the movement

By reflex effect, we have the rest of the cryptoactives that have made this movement back in V, which has left us practically in the same place, but which will surely have left many victims along the way.

Low volume scenario

This movement has come to break the low volume scenario in which the market had been developing for days. Yesterday we saw how our Crypto500 index experienced a 70% increase in trading volume

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We will see if this trend continues or we return to the previous scenario, replicating what happened in the prices that have left the movement in a simple anecdote on the chart