Crypto Traders Shrugs Off Inflation Data as Iran Tensions Simmer

• The market isn’t anticipating any significant directional swings from the inflation report.
• The March US pricing data may not be indicative of the whole picture, but they do show how the war in the Middle East might affect US prices.

Given the background of the Iran conflict and its inflationary consequences, some analysts see the current U.S. inflation data for March, expected Friday, as a significant signal. The most recent bitcoin market action, however, demonstrates that investors do not consider it a game-changer.

Analysts are projecting that the crypto market will respond to inflation news with a 2.5% price fluctuation. Options and derivatives pricing, which show traders’ predictions of Bitcoin’s potential movement over a certain time period, is the source of these probabilities.

Upcoming CPI Data

The market isn’t anticipating any significant directional swings from the inflation report, since a 2.5% swing is well within bitcoin’s recent average volatility. The widely-tracked 30-day implied volatility index, which stands for the market calm, has fallen to 46.5%, the lowest level since January 31, according to data provider TradingView.

The 30-day moving average is 3.4%, so this works out to a predicted daily move of around 2.9%. The demand for options, also known as hedging bets, determines implied volatility, which is a measure of traders’ expectations for price movements over a certain time.

Traders are essentially disregarding Friday’s consumer price index (CPI) announcement, according to the data. That’s a little strange, considering that the numbers might reveal how the conflict with Iran, which started in late February, affected inflation.

The March US pricing data may not be indicative of the whole picture, but they do show how the war in the Middle East might affect US prices. Interest rate markets have reduced their expectations for Fed rate reduction this year due to the elevated risks of inflation caused by the Iran conflict and the subsequent oil price shock.

Highlighted Crypto News Today:

Stablecoin Flows Could Hit $1.5 Quadrillion by 2035 as per Chainalysis