Cryptocurrency and stock markets are facing a macro week with CPI, PCE, Fed minutes and spending data set to test the possibility of a rate cut following crowded inflation and rising tensions.
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- January’s CPI fell to its lowest core value since 2021, briefly lifting cryptocurrencies before the gains disappeared.
- The market is currently watching retail sales, durable goods, PCE, and Fed minutes to gauge the timing of a rate cut.
- Bitcoin and Ethereum remain volatile as geopolitical risks and macro uncertainties dampen risk appetite.
Following mixed signals from last week’s inflation data, financial markets are gearing up for the release of several key economic indicators this week that could impact cryptocurrencies and stock prices.
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The consumer price index was slightly lower than expected in January, with headline inflation at 2.38% year-on-year and core CPI at 2.5%, the lowest since early 2021, government data showed. Stocks and crypto markets initially rose on Friday following these numbers, but the gains in crypto rebounded over the weekend.
Traditional US markets will be closed on Monday for President’s Day. The release of the ADP jobs report is scheduled for Tuesday, followed by the January retail sales report. Wednesday will also release consumer spending data and delayed December durable goods orders, as well as Federal Reserve Board minutes and 10 central bank speaking events.
The December personal consumption expenditure (PCE) inflation report, considered a key indicator by the Federal Reserve, is expected to be released later this week. Goldman Sachs reportedly raised its PCE outlook following the January CPI data, estimating that the core PCE price index would rise 0.40% in January. Economists believe this forecast is due to higher prices for consumer electronics and IT, which account for more weight in the PCE calculation than the CPI. A global shortage of RAM and storage components due to demand for AI data centers is contributing to rising prices for computers and components.
The CME Fed Watch Tool indicates that there is a 90% chance that interest rates will be left unchanged at the March Fed meeting, based on current market prices.
The cryptocurrency market has fallen in the past 24 hours, and the market capitalization has decreased. Bitcoin pulled back from recent highs in early Asian trading on Monday and has been range-bound for the past 10 days. The price of Ethereum has fallen significantly and alternative cryptocurrencies continue to fall.
The Kobeisi letter noted that geopolitical tensions and macroeconomic uncertainties remained high, and warned that volatility could continue this week.
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