How Much Could Bitcoin, Ether, XRP and Solana Move After the U.S. Inflation Report?

The crypto market, starved of fresh economic data due to the prolonged U.S. government shutdown, will finally get a key data point with the release of September’s Consumer Price Index (CPI) on Friday.

The inflation figure could trigger larger price swings in ether ETH$3,102.95 than in bitcoin BTC$91,232.72, a store-of-value asset. Overall, however, the expected market volatility is nothing out of the ordinary.

Inflation ticked higher in September

The consumer price index for September, due for release at 12:30 UTC, is expected to show the cost of living rose 3.1% from a year earlier, up from 2.9% in August and the highest in 18 months, according to a survey of economists by data provider FactSet. On a monthly basis, inflation likely rose 0.4%, matching August's pace.

Core inflation, which excludes the volatile food and energy categories, is forecast to have increased by 3.1% for the third straight month, with a monthly gain of 0.3%.

The consensus is that the data, whether it beats or misses expectations, is unlikely to deter the Fed from cutting its benchmark interest rate by another quarter-point next week.

That said, a hotter-than-expected print could bode well for the dollar, according to analysts at ING. A strengthening dollar index may arrest gains in the crypto market.

"We don’t think U.S. CPI will offer that opportunity as we expect a consensus 0.3% MoM core print. But surely with 50bp of easing fully priced in by year-end, any hot print could offer good support to the dollar," ING analysts said in a note Thursday.

Meanwhile, a lower CPI could trigger a risk-on reaction in markets, according to digital asset trading firm Zerocap.

"The U.S. government shutdown has starved keen market analysts of often crucial data, and a drip feed of macro signals in the wake of the crypto pullback two weeks ago means a lower CPI reading could easily stoke bullish sentiment amid an ongoing retail selloff," John Toro, head of trading at Zerocap, said in an email.

Ether to swing 2.9%

According to data from the Deribit-listed options market, ether, the second-largest token by market value, could move by 2.9% following the CPI release, outpacing bitcoin's volatility.

"The options market is currently pricing in a ±1.4% move for Bitcoin following today’s CPI release, while Ethereum is pricing in a larger ±2.9% move," Markus Thielen, founder of 10x Research, told CoinDesk.

Volmex Finance’s one-day implied volatility indices for Bitcoin and Ether indicate similar expected price fluctuations following the CPI release.

The one-day implied volatility indices for XRP and Solana currently stand at 91% and 76%, respectively, translating to expected price moves of approximately 4.7% for XRP and 4% for Solana within 24 hours.

Bullish volatility?

Importantly, these projected moves are nothing out of the ordinary. They reflect volatility in either direction and do not imply a bullish or bearish market outlook.

That said, Thielen's analysis of key indicators, such as the Stochastic, suggests a potential price bounce in BTC.

"The daily stochastic indicator is showing signs of bullish divergence, even though it has not yet reached its typical 15% lower bound. This suggests that downside momentum may be easing, potentially paving the way for a short-term recovery in bitcoin prices," Thielen said.