Markets watch CPI and the Fed for signals on rates, with volatility expected across crypto and tech sectors.
Crypto traders are bracing for a potentially turbulent week as Friday’s Consumer Price Index (CPI) data arrives just days before the Federal Reserve’s October 29 meeting.
The crypto market is eagerly watching for possible interest rate cuts, which could spark a new bull run. But is that really likely?
Two Critical Announcements During Government Shutdown
On Friday, October 25, the U.S. Bureau of Labor Statistics (BLS) will release the Consumer Price Index (CPI) for September and the past 12 months.
CPI measures the average price change over time for a basket of goods and services typical for consumers (e.g., food, housing, transportation, healthcare). It reflects the level of inflation and changes in the cost of living.
While CPI data is usually released monthly, this release is unique because it occurs during a U.S. government shutdown. For the first time since 2018, the data, delayed due to the shutdown, will be published on Friday, the last trading day of the week for traditional financial markets.
Despite the timing, the CPI report comes just days before the October 29 Fed meeting, where market participants expect guidance on interest rates. The Fed uses CPI data to shape monetary policy, particularly decisions about rate adjustments.
Typically, if CPI shows high inflation, the Fed may raise rates to curb it, which often negatively impacts riskier assets. If CPI is low, the Fed may cut rates or pursue stimulus measures, which usually boost markets.
Expect a Volatility Spike
What makes this situation unusual is that two major financial announcements are coming during the U.S. government shutdown, when agencies are closed and no additional data will be released. This is why crypto traders are calling it a “perfect volatility storm.”
If CPI comes in higher than expected, the Fed likely won’t cut rates, hitting tech and crypto sectors, which may drop. If CPI comes in lower than expected, the market may still rotate toward safer assets.
Either way, financial markets should expect volatility spike on thursday and Friday, says former Wall Street analyst.
Expectations for Higher Inflation
According to Polymarket, the majority (79%) of participants expect inflation to rise.
About 40% of respondents predict the announced inflation rate will be 3%, while nearly the same share (39%) expects it to be even higher, at 3.1%.
In both cases, this is 0.1-0.2% higher than August’s reported 2.9% inflation rate — the highest since the start of the year.
Besides CPI, other factors will also shape markets this week, with ongoing U.S.-China trade talks and earnings reports from major companies like Intel, Tesla, and Nvidia. Every move could set the tone for the fourth quarter.
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