According to CoinDesk, before the release of key inflation data this Friday, the profit-taking phenomenon in the cryptocurrency market continued, with the prices of Dogecoin and Ripple experiencing a sharp drop.
Currently, traders are closely monitoring the upcoming core personal consumption expenditures (PCE) data. As a key indicator for the Federal Reserve to measure inflation, the core PCE price index can more comprehensively and stably reflect the inflation situation of private consumption in the United States. Its expenditure composition is more in line with the actual behavior of consumers. The weights cover a wide range and can be adjusted based on the latest information and measurement methods. Once the released value of this data deviates significantly from market expectations, it is highly likely to trigger a chain reaction in the financial market, especially having a major impact on the direction of the cryptocurrency market. If inflation data is higher than expected, it may prompt the Federal Reserve to adjust its monetary policy, which in turn will lead to a change in the flow of market funds and exert downward pressure on the prices of cryptocurrencies. Conversely, if the data falls short of expectations, it might inject upward momentum into the cryptocurrency market.
Despite the market being shrouded in uncertainty, the inflow performance of spot ETFs remained stable. Among them, BlackRock’s IBIT has performed outstandingly, achieving net inflows for 30 consecutive days. This indicates that institutional investors remain optimistic about the digital asset sector. By continuously purchasing spot ETFs, they have provided certain support for the cryptocurrency market. This continuous inflow behavior of institutional investors has, to a certain extent, stabilized market confidence and also created a buffer zone for the prices of cryptocurrencies such as Bitcoin, preventing them from experiencing excessive declines during market fluctuations.
QCP pointed out that there is currently a divergence between digital assets and traditional technology stocks. On the one hand, the cryptocurrency market maintains a relatively stable development momentum, attracting the attention of many investors. On the other hand, the flow of funds in traditional technology stock-related products such as the TQQQ Nasdaq ETF has become increasingly cautious. This divergence may stem from multiple factors. For instance, the unique development logic and potential high returns of the cryptocurrency market have attracted some investors, while the traditional technology stock market, due to factors such as the macroeconomic environment and the competitive landscape of the industry, has made investors more cautious in their capital allocation.
Within the cryptocurrency market, the sharp declines of Dogecoin and Ripple have drawn widespread attention. As a popular MEME coin, the price fluctuations of Dogecoin are often greatly influenced by market sentiment and the popularity on social media. This sharp drop might be caused by the concentrated selling of profits accumulated in the previous period, or it could be due to a change in the market’s expectations for its future development prospects. The sharp drop in the price of Ripple may be related to factors such as market expectations for its development in cross-border payment and other application scenarios, changes in the regulatory environment, and the competitive landscape of the market. The sharp declines of these two cryptocurrencies not only caused losses to investors holding related assets, but also to some extent undermined market confidence, triggering a re-evaluation of the risks in the entire cryptocurrency market.
As the release date of the core PCE data on Friday approaches, investors in the cryptocurrency market are on high alert. They will re-examine their investment strategies and adjust their asset allocation based on the data results. The market expects that the volatility in the cryptocurrency market may further intensify before and after the data release. Investors need to remain highly vigilant and respond carefully to market changes.
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