Why must investors follow ИПЦ? How does this indicator shake the crypto market?

CPI (Consumer Price Index) is not just a term in economics textbooks; it is genuinely affecting your investment returns. From traditional markets to encryption assets, this unassuming number hides enormous market energy.

Core Concept: What does IPC actually measure?

The CPI is essentially a “price barometer” that tracks the average price changes of a basket of everyday consumer goods and services. The items in this basket are very tangible: food, clothing, transportation, healthcare, and entertainment - all of which are frequently purchased by average households.

When the IPC rises, it means that the same amount of money can buy fewer and fewer things, which is inflation. Conversely, the IPC is the most direct tool for measuring the depreciation of purchasing power.

How is the IPC calculated? A deep dive into the internal mechanisms

Statistical agencies in various countries (such as the U.S. Bureau of Labor Statistics) are responsible for the calculation of ИПЦ, a process that includes four key steps:

Step 1: Select Representative Products Not all goods are treated equally. The statistical department carefully selects the most commonly purchased items by consumers, and the weight allocation is based on actual expenditure ratios. For example, if a household spends 30% of its budget on housing, then the weight of housing in the CPI would be 30%.

Step 2: Collect Price Data from All Angles Data sources include retail stores, online platforms, and service providers—covering different regions across the country. This ensures that the IPC can reflect price differences and the real market conditions in different areas.

Step 3: Establish a Weighting System Each commodity or service is assigned a different weight based on its importance in consumer spending. The benefit of this approach is that the CPI can accurately reflect the real cost of living changes for the average household.

Step Four: Indexing Process The CPI uses a benchmark year of 100 as a reference point. If the current CPI is 105, it means that prices have risen by 5% compared to the benchmark year. This simple calculation allows anyone to quickly understand the extent of price changes.

The Five Practical Applications of IPC

The IPC is not a theoretical tool; it directly affects policy-making and investment decisions.

1. The Gold Standard for Measuring Inflation Central banks, businesses, and investors in various countries rely on IPC to assess the health of the economy. After the data is released, financial markets often experience significant volatility.

2. Cost of Living Adjustment (COLA) Government payments such as social security and pensions will be automatically adjusted according to the ИПЦ to ensure that recipients' actual purchasing power is not eroded by inflation.

3. The Decision-Making Basis of Central Bank Policies The central bank decides whether to raise or lower interest rates based on CPI data. High CPI → Central bank tightens → Interest rates rise; Low CPI → Central bank loosens → Interest rates fall.

4. Index of Bonds and Financial Products Some bonds (such as TIPS) are directly linked to CPI, providing investors with inflation protection.

5. Hard Data on Salary Negotiation Unions and employees often use IPC as the basis for wage increases to ensure that actual salaries are not eroded by inflation.

What happens to the economy when the CPI rises?

When the IPC continues to rise, the entire economic ecosystem will produce a chain reaction:

Declining Consumption Power — When the price increase exceeds the income growth rate, consumer purchasing power is limited, putting pressure on the retail and service industries.

Central Bank Begins Raising Interest Rates — To curb inflation, the central bank has increased the benchmark interest rate. Higher interest rates enhance the appeal of traditional savings and bonds, which often suppresses the demand for high-risk assets (including encryption currencies).

Wage and Price Competition — Employers are forced to raise salaries to retain employees, further exacerbating corporate cost pressures.

Frequent Policy Adjustments — The government may implement tax cuts or subsidy policies to alleviate inflation pressure.

The Invisible Connection Between IPC and the Encryption Market

How does IPC specifically affect Bitcoin, Ethereum, and other encryption assets? The relationship is deeper than you think:

From interest rate hikes to market shift

When the IPC is high, the central bank is forced to raise interest rates. In a high interest rate environment, investors flock to safe fixed income assets (government bonds, time deposits), and high-risk encryption currencies lose their attractiveness. Recent data clearly shows that every time an interest rate hike cycle starts, the encryption market undergoes adjustments.

changes in asset allocation under long-term inflation

If inflation remains high (ИПЦ长期走高), investors will reassess their asset allocations. Some institutional investors view Bitcoin as “digital gold” — a means to hedge against fiat currency depreciation. Therefore, in the medium to long term, high ИПЦ may drive more funds into the encryption market.

Instant reaction of market sentiment

The release of CPI data is an important market event. Better than expected data → optimistic about inflation → lower probability of interest rate hikes → risk assets benefit. Conversely, the opposite is true. This is why the cryptocurrency market experiences significant volatility every month on the CPI release date.

Different Impacts on Retail Investors and Institutions

Retail investors often feel panic when they see high inflation, which may force them to stop losses. In contrast, wise institutional investors view high IPC as an opportunity to build positions at low prices and plan for the long term.

Practical Investment Advice

Focus on IPC release date — New data released monthly may trigger market reassessment.

Understanding Central Bank Direction — IPC data affects central bank policies, which directly impact liquidity, consequently affecting the encryption market.

Distinguishing between short-term and long-term — In the short term, high inflation may depress encryption assets. However, in the long run, sustained inflation may strengthen the position of cryptocurrency as a store of value.

Multi-Asset Allocation — Do not put all your bets on a single asset. In a high-inflation environment, diversifying investments (including considering encryption assets as part of the allocation) becomes even more important.

Final Thoughts

The IPC may seem like a cold and hard economic data, but it is actually the key to understanding modern financial markets. It influences central bank decisions, market liquidity, and investor sentiment, ultimately affecting the rise and fall of the encryption market. Mastering the logic of the IPC equips you with the tools to understand market cycles.

Whether you are a long-term holder or a trader, closely tracking the movements of ИПЦ and the responses of central banks is essential for maintaining stability in the encryption market.