The volatility in the crypto market after the fall in the US Consumer Confidence Index (CCI)

After two straight months of gains, crypto markets gained momentum after the announcement of a lower US Consumer Confidence Index (CCI) of 102.5 for October 2022.

The index, which tracks sentiments about how households view their future economic status, is down from 107.8 in September 2022.

Families still optimistic despite low numbers

The Conference Board, a 501(c)(3) non-profit think tank, publishes the CCI on the last Tuesday of each month at 2 p.m. UTC. Market research firm Toluna CCI conducts the survey.

US Consumer Confidence Crypto Markets
Source: Conference Board

Following the fall in the CCI numbers, Coingecko shows that bitcoin rose from $19,427.90 to $19,505.23. Ethereum is up about 0.5% to $1,385.08 since the announcement and is up 4% in the past 24 hours. The total crypto market cap is also up 1.3% today, breaking the $980 million mark.

According to Lynn Franco, senior director of economic indicators on the conference board, expectations of inflation and rising food and gas prices drove the CCI down. In October 2022, surveyed households said they would cut back on vacation plans, but were planning to buy expensive appliances, homes and cars.

“Looking ahead, inflationary pressures will continue to exert strong adversity to consumer confidence and spending, which could result in a challenging holiday season for retailers,” Franco said.

CCI numbers may point to crypto recovery

A CCI of 100 or higher indicates a generally optimistic future economic outlook for households. This indirectly shows that they are planning to spend rather than save. With homes, cars and big-ticket items on the list, it is clear that homes are primarily targeting property purchases in the near future. These plans may indicate that consumers expect the Federal Reserve to ease interest rate hikes in the coming months. The Fed began raising interest rates as inflation numbers, which have recently started to come down, were red-hot earlier this year.

Expectations of a less aggressive Fed tightening could also open up consumers to investing in riskier assets such as crypto and equities, accelerating the transition from a bear market in the medium term.

Three major stock indexes are already building on Monday’s gains as reports emerged that Fed members discussed reducing the size of future interest rate hikes. On October 25, 2022, the Dow Jones Industrial Average gained 0.2%, while the S&P 500 gained 0.8% and the Nasdaq Composite gained 1.4%.

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