Crypto, Stocks Headed for Correction if CPI Print Isn’t Strong

Wall Street’s ‘fear gauge,’ has remained well below its one-year average, indicating traders think that have handle on the Fed’s next moves

article-image

Blockworks exclusive art by Axel Rangel modified by Blockworks

share

Ahead of Thursday’s Consumer Price Index print, investors and analysts are speculating whether cryptocurrencies and equities can maintain their recent rally. 

Bitcoin and ether stayed cautiously in the green Tuesday afternoon in New York after posting overnight gains Tuesday that saw both currencies lock in year-to-date gains. The top two cryptos are up more than 5% and 11% since the start of the year, respectively, data shows

“If risk appetite remains intact post inflation report, Bitcoin could make another run at the $18,500 level,” Edward Moya, senior market analyst at Oanda, said in a note Wednesday. “If core prices prove to be troubling, Bitcoin could decline back towards the December lows.” 

Equities have similarly hit the ground running in 2023 after a disappointing 2022. The S&P 500 and Nasdaq Composite indexes posted around 1% and 1.3% gains Wednesday afternoon, respectively. 

Fortunately for risk-asset traders, the CBOE VIX Index, known as Wall Street’s ‘fear gauge,’ has remained well below its one-year average of 25.6 for 42 trading days, Nicolas Colas, co-founder of DataTrek Research, said. 

“This is the longest run of sub-25 VIX readings since the start of the current market worries over Fed policy, recession, and so forth,” Colas said. 

The trend is indicative of markets thinking they have the Federal Reserve’s next moves correctly mapped out, but stocks are still not fully out of the woods, Colas warned. Fed policy may not be driving equity prices as much as it once was, but the Federal Open Market Committee’s meeting at the end of the month will still hold some weight. 

The market is banking on CPI numbers proving inflation is letting up, but the first print of 2023 is more nuanced than the headline number, which was the main focus on 2022, Tom Essaye, founder of Sevens Report Research, said. Commodity, housing and goods prices are all trending lower, so core CPI, which excludes volatile food and energy, is going to be key, he added. 

“The bottom line is that we must see inflation metrics continue to fall quickly if the market is going to hold these levels and hope to sustain a broader rally,” Essaye said.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

Plus, fresh testnets are rolling out to advance zk-verifiable data delivery

article-image

In Friday’s Roundup, Jason Yanowitz said he doesn’t think we’ll see the markets “rip” until potentially January or even February

article-image

Why that the bull market might not start until 2025

article-image

August’s annual headline figure came in at 2.3% after an upward revision Thursday, so things are moving in the right direction 

article-image

MSTR’s stock price was roughly $248 at 2 pm ET Thursday

article-image

Ever since rates came off zero and fiscal deficits exploded, markets have started paying close attention to how the government is funding itself