This Friday, a rare confluence of macro catalysts will put risk assets, and by extension cryptocurrencies, in jeopardy. The U.S. Bureau of Labor Statistics (BLS) has confirmed that it will release the delayed September consumer price index on Friday, October 24 at 8:30 a.m. ET, even though most federal statistics remain frozen due to the ongoing government shutdown. In a short notice, the agency emphasized the exceptionality of the measure, adding that “no other releases will be rescheduled or made until normal government services resume.”
Cryptocurrency bulls on alert
The timing is unusual in two ways. First, the CPI is rarely printed on Fridays. Kobessi Letter via X noted that this is the first Friday CPI since January 2018. Second, the index is determined five days before the Federal Open Market Committee (FOMC) meeting on October 28-29, compressing the window for policy response to the only key data.
As Adam Covisi noted, “Something unusual is happening this week. We are receiving CPI inflation data on Friday during the US government shutdown…Not only is this five days before the October 29th Fed meeting, but this is the first time since January 2018 that CPI data has been released on a Friday.”
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Against this backdrop, crypto strategist Nick Patel captured the logic of the prevailing risk tone in a morning note via X. An article with more content than the survey “will be important” as data is scarce during a “busy” week.
“I would even expect a moderately above-consensus inflation performance to be welcomed by the market. I would like to see the inflation break-even bottom here and start rising again (and make no mistake, the Fed will still cut into this, making this combination a bullish risk). Growth and inflation remain what I expect for the next six months, but we are currently enduring a period of uncertainty around both.”
macro background
To understand why this particular CPI is important for crypto assets, consider short-term inflation trends and the context of the Fed debate. Composite CPI increased by 0.4% in August, following a 0.2% month-on-month increase in July. The year-on-year rate accelerated from 2.7% to 2.9%. Core CPI remained at 3.1% compared to the previous year.
A series of news reports in the early summer suggested that headline inflation was stabilizing in the high 2% range. June’s CPI was 2.7% year-on-year, an increase of 0.3% month-on-month, and July’s CPI was 2.7% year-on-year, matching the same month-on-month increase, but the core recorded the largest monthly increase since January. The reacceleration in August moved the debate away from a linear disinflationary narrative and toward a more nuanced view, one that is more tariff-sensitive.
Related article: Crypto bulls smell blood: SOFR–RRP spread tips QT pivot by October
That makes the Fed preview an unusual dichotomy, even if the meeting schedule itself is conventional. The central bank’s Oct. 28-29 meeting will be held live, with interest rate markets leaning toward another quarter-point rate cut, followed by a more contentious December. However, the data blackout has amplified the influence of the CPI on the policy narrative, so a single announcement could shift the outlook for both the magnitude of October trends and year-end guidance.
All of this collides with the reality of crypto macro-beta. Large tokens typically outperform when liquidity expectations improve due to easing financial conditions and lower real yields. If policies become more cautious, the period-like characteristics of cryptocurrencies could move in the opposite direction. This is why the market is stuck in the Close Friday CPI habit.
The bottom line for cryptocurrency participants is simple. Friday’s CPI is not just “another result of inflation.” The announcement is unusual in that it comes on a Friday, five days before the FOMC decision and with data drying up, with PMI and sentiment released hours later. If the market cools significantly, easing of expectations could take hold towards the end of the month.
Even if it turns out to be unexpectedly hot and reaffirms the strength of August, as long as the Fed signals that it will keep cutting rates, the market could still try to view August as growth-positive, as Nick Patel suggested. Either way, by compressing signals and policy into a single news cycle, the shutdown became the fulcrum of October’s crypto story one morning.
At the time of writing, the market capitalization of cryptocurrencies was $3.71 trillion.
Featured image created with DALL.E, chart on TradingView.com
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