Are we going to see a significant breakout for Bitcoin in September, or will September’s economic data continue to support the gloomy mood that has been holding the market back for weeks?
Bitcoin is Awaiting its Next Signal
The price of cryptocurrency has been obstinately trapped in a narrow range for the past few weeks, causing the market to stagnate.
Around $60,000 is where Bitcoin has been trading most of the time; it frequently dips slightly below this level and finds it difficult to sustain any momentum beyond it. As of September 3, Bitcoin is trading at around $57,500, a figure it has returned to several times in the previous month.
Parallel to this, Ethereum has encountered significant resistance at $2,500 and, despite several tries to break through, has hardly moved from this range. As of this writing, it is trading at $2,450 levels.
Many bitcoin traders and investors are uneasy due to this sideways price movement, especially since September approaches and is full of important events that might have a big impact on the direction of the market.
These include the Federal Open Market Committee meeting, the release of the Consumer Price Index (CPI) and Producer Price Index (PPI) data, and the U.S. Presidential Debate.
The fact that the Federal Reserve’s next interest rate decision is probably going to be heavily influenced by the PPI and CPI figures makes them very significant. Should inflationary pressures seem to be waning, the Fed may decide to lower interest rates.
With so much in store, let’s take a closer look to see what to anticipate, what will probably happen, and where things may go from here.
The Inflation Metrics Guiding the Fed’s Upcoming Action
Two of the most important economic indicators in the United States that might affect the Fed’s interest rate decision this month are the PPI and CPI. Gaining insight from these figures is essential to understanding potential market reactions in the upcoming weeks.
The August CPI data will be made public on September 11. It is a key indicator of inflation, showing how prices for common products and services fluctuate over time.
CPI inflation in July was 2.9%, a little lower than the 3% level in June, indicating a slowdown in inflation. However, the Fed wants to see inflation drop below 2%, so the CPI number for August will be closely monitored.
This figure might indicate that inflation is headed in the right direction and lessen the pressure on the Fed to keep interest rates high if they fall below 2.9%.
The PPI statistics will be made public on September 12, the day after that. By calculating the average change in selling prices that domestic producers get for their goods, the PPI provides information on supply chain inflationary pressures.
The PPI showed a more dramatic decline than expected in July, with the year-over-year rate dropping to 2.2%, far less than the 2.7% recorded in the prior week.
It is impossible to overstate the significance of these inflation indicators, as they will have a major impact on the Fed’s interest rate decision at the next FOMC meeting on September 18.
At its most recent meeting, the Federal Reserve decided to hold rates constant; the current target range is 5.25% to 5.50%. However, if inflation keeps down, Fed Chair Jerome Powell has signaled that the end of the central bank’s rate-hiking cycle is approaching.
Next, where may the cryptocurrency industry go?
As the cryptocurrency industry reaches a critical juncture, several experts are weighing in on its future. One notable signal comes from crypto market analytics firm Santiment, which recently highlighted that Bitcoin appears to be showing signs of revival.
Santiment suggests that if traders’ fear, uncertainty, and doubt (FUD) continue to rise, particularly with increasing bearish sentiment, this negativity could actually set the stage for a recovery. In other words, when the market sentiment becomes overwhelmingly pessimistic, it may be a sign that a reversal is imminent, offering hope for Bitcoin in September.
