Combining US CPI expectations to analyze ETH and BTC requires understanding the following core logical chains:

1. Core Impact Pathway

US CPI Data → Federal Reserve Monetary Policy Expectations → US Dollar Liquidity/Risk Appetite → Cryptocurrency Market (BTC/ETH)

CPI (Consumer Price Index) is the most critical basis for the Fed to adjust monetary policy (especially interest rates). Higher-than-expected CPI will reinforce expectations of rate hikes or delaying rate cuts; conversely, lower-than-expected CPI may strengthen expectations of rate cuts or halting hikes.

2. Three Possible CPI Scenarios and Their Impacts

Scenario 1: CPI above expectations (Persistent Inflation)

· Market Reaction: Risk aversion surges. Traders bet on a more “hawkish” Fed (raising rates, maintaining high rates longer), leading to:
· US Dollar Index (DXY) strengthening.
· US Treasury yields (especially short-term) rising.
· Stocks, gold, cryptocurrencies, and other risk/inflation-hedging assets under pressure.
· Impact on BTC/ETH:
· Short-term (hours/days after data release): Likely to decline sharply. Increased correlation with Nasdaq tech stocks, resulting in sell-offs. Leveraged long positions may be liquidated, exacerbating declines.
· Medium-term: Continued high inflation data will reduce market expectations for rate cuts in 2024, suppressing overall crypto bullish sentiment, and slowing capital inflows.
· ETH/BTC Observation: In a broad decline, ETH, due to higher volatility, may fall more than BTC. Active DeFi, NFT, and ecosystem activity may also weaken as risk appetite diminishes.

Scenario 2: CPI in line with expectations (Gradual Inflation Decline)

· Market Reaction: The market has largely priced in this scenario. Reactions will be relatively mild, with volatility mainly from surprises in sub-components (e.g., core CPI, super-core inflation).
· Impact on BTC/ETH:
· Short-term: Possible “buy the rumor, sell the fact” pattern. If prices rose earlier on expectations of lower CPI, data release may trigger slight profit-taking. Overall, a choppy trading range.
· Medium-term: Data in line with expectations will not alter the Fed’s policy path; focus will shift back to internal crypto factors (ETF fund flows, on-chain activity, technological upgrades).
· ETH/BTC Observation: Market may diverge, driven more by ecosystem news (e.g., ETH ETF progress, Layer2 data; BTC miner activity, ETF net inflows).

Scenario 3: CPI below expectations (Rapid Cooling of Inflation)

· Market Reaction: Risk assets rally strongly. The market will bet on earlier and faster rate cuts by the Fed.
· US Dollar Index weakens.
· US Treasury yields decline.
· Global liquidity expectations improve, capital flows into risk assets.
· Impact on BTC/ETH:
· Short-term: Very bullish. Crypto markets will surge along with US stocks (especially tech stocks). Possible short squeeze and FOMO-driven buying.
· Medium-term: Reinforces narrative of cryptocurrencies as “beneficiaries of loose liquidity,” attracting traditional capital and supporting upward trends with macro fundamentals.
· ETH/BTC Observation: In a broad rally, major altcoins like ETH may outperform BTC, as high risk appetite drives capital toward higher-beta (more volatile) assets. ETH ecosystem tokens may show more active performance.

3. Nuanced Differences Between BTC and ETH

· BTC: More purely a “macro asset” and “digital gold”
· Highly sensitive to CPI/rate changes. Its price includes significant macro liquidity premiums.
· After the approval of US spot ETFs, it is more closely connected to traditional financial systems and more susceptible to macro capital flows.
· During CPI-driven volatility, BTC is often viewed as the “benchmark asset” and “safe haven” within the crypto market (relative to other altcoins).
· ETH: Driven by macro + ecosystem fundamentals
· Also affected by macro factors but compounded by its own ecosystem’s fundamentals.
· Positive factors: Lower CPI leading to a broad rally could boost ETH due to its extensive DeFi, gaming, and Layer2 ecosystems.
· Risks: Higher CPI causing market crashes may pressure high-leverage applications within ETH’s ecosystem (e.g., lending protocols), triggering chain reactions.
· Long-term narrative: Its “deflationary asset” (via EIP-1559 burn mechanism) and “digital economy infrastructure” narrative become more attractive in low-inflation, high-growth environments.

4. Special Considerations in the Current Market Environment (as of 2024)

1. Rate Cut Expectations: The market has shifted from “rate hikes to fight inflation” to “when to cut rates.” Therefore, CPI data’s impact on rate cut timing expectations is more critical than before.
2. Strong Internal Crypto Drivers:
· BTC: Continuous inflows/outflows of spot ETF funds are key recent price drivers, sometimes even offsetting macro adverse effects temporarily.
· ETH: Progress in ETF application approvals is a more significant catalyst than individual CPI data.
3. Geopolitics and Safe-Haven Demand: During high inflation and volatility, BTC’s “digital gold” safe-haven attribute may be repriced, but this is balanced against the negative impact of tightening dollar liquidity.

Summary and Trading Strategy

1. Before Trading:
· Monitor market consensus expectations: compare actual release values with forecasts, focusing on core CPI.
· Assess positions: volatility often spikes around CPI release; check leverage to avoid liquidation from sharp swings.
· Prepare scenario-based plans: pre-plan responses for the three scenarios outlined above.
2. During Trading:
· Observe real-time reactions: monitor immediate responses of DXY, Nasdaq futures (especially Nasdaq), as crypto markets tend to lag by a few minutes but follow the same direction.
· Beware of “false moves”: initial sharp volatility post-data may reverse; wait for market digestion (usually 15-30 minutes) before judging the trend.
3. Long-term Perspective:
· For long-term holders (HODLers), a single CPI report should not alter core investment logic. Persistent high inflation damages the appeal of all risk assets; controlled inflation favors emerging assets like cryptocurrencies.
· ETH’s long-term value depends more on network adoption and utility; macro cycles mainly influence its price fluctuation range.

Final conclusion: US CPI expectations are one of the most critical external macro variables influencing BTC and ETH prices in the short term, mainly through changing global dollar liquidity and risk appetite. Currently, it primarily trades on the “Fed rate cut path.” BTC tends to react more directly and sensitively, while ETH must consider both macro impacts and its own ecosystem development. Traders should implement risk management, and investors should look beyond short-term volatility to focus on long-term trends.