By: Zeng Han-Jun, Head of Research, Market Capital Research

For the Bitcoin and cryptocurrency market, the upcoming week is poised to be a critical one with several significant events on the horizon. Among them, three events stand out as particularly noteworthy: the release of July’s Consumer Price Index (CPI) and Producer Price Index (PPI) data, as well as the highly anticipated decision on the Bitcoin ETF application by ARK Invest.

Consumer Price Index (CPI):
Scheduled for Thursday at 8:30 am EST, the CPI is a crucial measure of inflation that has garnered significant attention as the United States grapples with fluctuating inflation rates. Analysts predict a YoY rise from 3% to 3.3% in July as the beneficial base effects from the previous year begin to fade. The Cleveland Fed’s Inflation Nowcast model even indicates a slightly higher forecast of 3.42%, surpassing the consensus.

Following the July interest rate hike of 25 basis points by the Federal Reserve, market expectations are leaning towards no further rate hikes at the next FOMC meeting in September. However, a potential re-acceleration in inflation data could dramatically alter these expectations. It is worth noting that there will be two CPI data releases before the September FOMC meeting, providing crucial insights. If inflation rises after a sustained decline, compounding previous peaks of 9.1%, it could present a challenging scenario for financial markets.

Of particular interest is the core CPI, excluding volatile food and energy prices. Last month’s figure sat at 4.8%, and projections for July suggest a slight deceleration to 4.7%. However, the surge in oil prices introduces uncertainty. Notably, Peter Schiff, a prominent financial commentator, highlighted the potential impact of rising oil prices on CPI, which could push the Federal Reserve further from its 2% inflation target.

Producer Price Index (PPI):
Scheduled for release on Friday at 8:30 am EST, the PPI serves as a leading indicator for the CPI, measuring the average change in selling prices received by domestic producers. In June, the PPI YoY figure stood at 0.1%, bordering on negative territory. However, projections for July predict a rebound to 0.7%.

On a monthly basis, the PPI increased by 0.1% in June, slightly lower than the expected 0.2%. For July, a further increase of 0.2% is anticipated. A rising PPI may signal an impending acceleration in CPI as higher production costs are passed on to consumers, potentially triggering a subsequent surge in overall inflation. Such a scenario could significantly impact investor sentiment and strategies in the Bitcoin and crypto market, raising concerns about a second wave of inflation.

Bitcoin ETF Decision for ARK Invest:
Arguably one of the most significant market catalysts is the potential approval of a Bitcoin spot ETF. Among the contenders, Cathie Wood’s ARK Invest finds itself at the forefront, awaiting a decision. While financial giants like BlackRock, Fidelity, Invesco, and others wait for an initial response from the SEC, ARK Invest has already submitted its application.

The SEC has already granted ARK Invest one extension and the second deadline is set to expire on Sunday, August 13. The SEC has the power to approve, reject, or extend the review period four times, totaling 240 days. Many experts believe the SEC will likely opt for another extension, but given SEC Chairman Gensler’s recent statements, surprises cannot be ruled out.

Late evening on Friday holds the potential for significant news. However, if the SEC extends the review for ARK Invest, Bitwise will be next, having a deadline on September 1, followed by BlackRock, VanEck, WisdomTree, Invesco, and Fidelity on September 2.

The upcoming release of CPI and PPI data, along with the Bitcoin ETF decision for ARK Invest, presents several critical factors that could shape market trends and investor sentiment. While the overall future remains uncertain, closely monitoring these events will provide valuable insights for navigating the dynamic Bitcoin and crypto landscape.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.