Watch the CPI on Tuesday and the PPI on Wednesday. These two sets of data will very likely directly determine the direction of the market’s sentiment over the next few days.

If the inflation numbers come in higher than everyone expects, the market will likely feel that the Federal Reserve won’t ease as quickly. The US dollar index is prone to strengthen, and assets like BTC and ETH will be under clear pressure and have a hard time performing on their own.

Conversely, if inflation cools, the situation changes: rate-cut expectations bounce back, the dollar weakens, market liquidity improves, and participants are more willing to return—sentiment can turn around quickly.

So over these two days, rather than constantly staring at BTC’s candlestick chart, you may want to watch the US dollar index and the yield trends on US Treasuries more closely. Before price action moves, the clues are often already embedded in these data.

Add another variable: from the Federal Reserve’s June rate forecast dot plot, it’s also clear that they are leaning toward at least one more rate hike within the year. The rate-cut cycle that the market had been counting on can basically be considered on hold for now.

The current Fed is like standing at a crossroads: the door to rate cuts is almost shut, while the door to continued hikes is still open. Ultimately, which way it goes will largely depend on tonight’s CPI data.

Before the data is released, gold has already shown a clear pullback, and BTC also briefly fell below $63,000. For the crypto market, tonight is destined to be a high-volatility moment.

In addition, the flurry of speeches afterward will further amplify sentiment swings.

Before the data is released, it’s advisable not to go all-in in a single direction, and beware of the market flipping back and forth like pins being inserted. Good risk control is what will help you last longer in this market.

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