The digital currency market is currently in a phase of consolidation following a period of heightened fluctuations in the past week. Presently, Bitcoin [BTC] is being traded at $96,865, experiencing a slight 0.06% decrease in value over the last 24 hours. Meanwhile, the primary altcoin, Ethereum [ETH], saw a decrease of 0.9%, trading at $2,631.
The reduced volatility witnessed recently may not last long, as several significant macroeconomic events are on the horizon that could have a significant impact on market dynamics.
Potential Impact of U.S. CPI Data on the Crypto Market
The upcoming release of the U.S. Consumer Price Index (CPI) data for January 2025 on Wednesday is expected to be a key event to watch. In the previous month, the total CPI saw a rise to 2.9%, while the core CPI fell to 3.2%.
This increase played a role in the Federal Reserve’s choice to maintain interest rates at 4.25%-4.5%.
Market Watch has predicted a decrease in the CPI rate to 2.8% and a drop in the core rate to 3.1%. Such a decline could lead to a more positive economic outlook.
If inflation eases, there may be a shift back to a dovish stance by the Federal Reserve, accompanied by a resumption of interest rate cuts. Such circumstances could bode well for the crypto market.
Nevertheless, based on the CME FedWatch Tool, investors are expecting that the Federal Open Market Committee (FOMC) meeting in March will maintain interest rates at their current levels.
Appearance of Fed Chair Before Congress
This week, Jerome Powell, the Chair of the Federal Reserve, is slated to appear before both the House Financial Services Committee and the Senate Banking Committee for his semi-annual monetary policy testimony.
In this testimony, Powell will provide insights into the economy, inflation, and the potential for rate cuts.
If Powell indicates a potential relaxation of monetary policy and addresses inflation concerns positively, this could benefit the crypto market. Conversely, a hawkish stance might lead to a negative market sentiment.
Recent statements by Powell that U.S. banks can cater to crypto customers if risks are mitigated have been received positively. If similar comments are made during his Congressional appearance, it could stimulate demand for digital assets.
Anticipating Coinbase’s Q4 Earnings
Late this week, the U.S. exchange behemoth Coinbase is set to unveil its earnings report for the fourth quarter of 2025. Should these results surpass expectations, it might further propel the COIN stock, which has gained 142% in the past year.
While the performance of the stock itself does not directly impact crypto prices, it can contribute to boosting confidence in the crypto market and enhancing market sentiment. Positive sentiment often acts as a catalyst for price appreciation.
As of now, the fear and greed index has fallen to 43, indicating a neutral sentiment. This could result in crypto prices remaining stagnant until significant buying or selling activity emerges.