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The U.S. economy has ignited inflation fears due to unexpectedly high employment data and the potential return of tariffs from the Trump era. Last week’s non-farm payroll figures significantly exceeded expectations, coming in at 256,000 against a forecast of 164,000. This surprising data has largely dashed hopes for interest rate cuts, leading to sharp declines in U.S. stock markets.

Inflation Anxiety Impacts Cryptocurrency Market

Recent data indicating an overheating U.S. economy has triggered fluctuations in the cryptocurrency market. Investors are closely monitoring upcoming critical economic indicators, such as the Producer Price Index (PPI), Consumer Price Index (CPI), and unemployment claims. According to QCP Capital, these figures could further intensify inflationary pressures in the markets and test cryptocurrencies‘ potential as inflation hedges.

Technical levels in the cryptocurrency market are holding firm for now. Support levels at $91,000 and $3,100 remain robust, while volatility appears relatively subdued. Although a slight selling pressure is noted in the options market, a significant panic is absent. However, investors perceive this as a temporary calm.

This Week Could Be Pivotal for Cryptocurrencies

Analysts from QCP Capital suggest that the release of PPI on January 14, CPI on January 15, and unemployment claims on January 16 could play a decisive role in the markets. All these data points may test cryptocurrencies’ resilience against inflation. Particularly, strong upward trends in U.S. economic growth data could bolster expectations for interest rate hikes, adding pressure on cryptocurrencies.

Under the influence of macroeconomic developments, the cryptocurrency market seems poised for a significant test this week. Investors must remain vigilant, focusing on technical levels and macro indicators to prepare for possible sharp market movements.

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