Cryptocurrency prices slipped sharply on Monday morning as investors prepared for a relatively busy week in the market. Bitcoin, the biggest coin in the world, dropped to $25,600 while ApeCoin, Arbitrum, and Gala fell to $1.21, $0.83, and $0.014. Other top underperforming coins were Sui, Frax Share, Internet Computer, and Solana.
Cryptocurrencies will be in the spotlight this week as investors watch the price of crude oil, US inflation data, and the upcoming European Central Bank (ECB) decision. Brent, the international oil benchmark, has soared by more than 20% from the lowest level in June this year and moved to $90. WTI, the US benchmark, rose to $87.
Oil price is important for cryptocurrencies because of its impact on inflation. To a large part, oil is usually the biggest contributor to inflation. Therefore, rising oil prices could trigger the Fed to be more hawkish in its coming meeting later this month.
Bitcoin, ApeCoin, and other cryptocurrencies will also react to the upcoming US consumer inflation data scheduled for Wednesday this week. Economists believe these numbers will show that inflation rose for the second straight month to 3.4% in August. They also expect that the core CPI will drop from 4.7% to 4.2%.
These numbers will come a week ahead of the important meeting by the Federal Reserve. Higher-than-expected figures could see the Federal Reserve hike interest rates by another 0.25%.
In separate statements last week, Fed officials like Lori Logan, Jerome Powell, and Susan Collins have pointed to a pause. Collins, who heads the Boston Fed said:
“The risk of inflation staying higher for longer must now be weighed against the risk that an overly restrictive stance of monetary policy will lead to a greater slowdown than is needed to restore price stability. This phase of our policy cycle requires patience.”
Cryptocurrencies will also react mildly to the upcoming European Central Bank (ECB) decision. The bank is expected to leave interest rates unchanged at 3.75% since the bloc’s economy is slowing. Germany, the bloc’s powerhouse, has contracted in the past two straight quarters.
The outlook for Bitcoin and other cryptocurrencies like ApeCoin, Gala, Filecoin Arbitrum, and Solana is a bit dovish this week. This will only change if there is an important news that brings investors back to the industry.