Bitcoin, Ethereum among leaders of cryptocurrency market recovery, but European CPI data could change that
Last weekend and the beginning of this week were pleasant surprises for cryptocurrency investors and traders as some altcoins are showing double digit gains, and the biggest cryptocurrencies on the market are rallying and reaching new levels, but it might be too early to celebrate as massive risk factors still exist.
European inflation data
The CPI data release in the United States is usually considered a stronger signal for investors, hence it has more impact on the cryptocurrency market. But the same data for the European Union might also affect the cryptocurrency market heavily, considering the percentage of traders on the crypto market in Europe.
Additionally, the United Kingdom, Canada and Japan will all announce their June CPI. Since many developed countries are announcing inflation data, investors will see the real state of global financial markets.
Financial experts and analysts expect elevated inflation numbers similar to U.S. data or even higher, considering the European Central Bank’s relative calmness compared to the reaction of the U.S. financial regulator, which remains hawkish.
U.S. dollar is losing its strength
As we mentioned in our previous market review, the DXY rally is one of the main factors pushing the price of Bitcoin down and not letting it gain more momentum on the market in addition to the lack of inflows on the market.
In the last two trading days, the U.S. dollar has lost more than 1% from its value and reached a one-week low. The main reason could be the desire of investors to protect themselves from the potentially soft reaction of the Fed to the inflation data we received earlier in the last week.
DXY might also enter a “cool-off” retrace mode after rallying for the last 50 days against other currencies. The potential strengthening of monetary policy in the European Union will also cause a drop in the value of the U.S. dollar against the Euro.
Altcoins are getting second wind
Despite the macro pressure that remains on the cryptocurrency market, altcoins like LDO, MATIC and Ethereum are showing strong performance on the cryptocurrency market.
Ethereum investors gained more hope in the network after the revelation of the Merge update date. Following the release, Ethereum Classic, which positions itself as the “true” version of Ethereum, rallied by over 35%.
Lido Finance governance token LDO also saw a massive gain as decentralized platforms remain among the biggest stakers in Ethereum 2.0, benefiting from the upcoming Ethereum update.