Bank of America Says Don’t Sell Ahead of CPI Report: Crypto Impact

Bank of America issued a timely warning to investors: Resist the urge to sell in May, especially ahead of the upcoming Consumer Price Index (CPI) report.

This advice comes as the CPI data for April 2024, which will be released by the US Bureau of Labor Statistics on May 15, looms large over financial and crypto markets.

Bank of America says HODL.

According to the Cleveland Federal Reserve, the expected CPI report is expected to reflect continued inflation, with forecasts for a 0.4% increase in core inflation and a 0.3% increase in inflation. Kalshi, an event forecasting site, forecasts inflation at 3.3% to 3.5%.

These figures, if accurate, indicate that inflation has remained above the Federal Reserve's target of 2 percent.

The Federal Reserve has kept a tight stance on inflation and raised interest rates to curb inflation. Despite these efforts, inflation is stubborn, especially in the accommodation category, which has had a significant impact on the CPI index.

The Federal Open Market Committee (FOMC) hopes that easing accommodation costs will eventually help meet inflation. However, so far there is little evidence of such a trend.

As the market braces for the CPI report, Bank of America analysts recommend holding off on selling investments. Historical data suggests that the S&P 500 has performed well in the summer months, particularly during presidential election years.

“The S&P 500 (SPX) tends to rally in the summer, and presidential election years can see big summer rallies,” the bank said.

June to August was the second strongest three-month period historically, with an average return of 3.2%. In election years, the average return increases to 7.3%, while the S&P 500 is up 75%. Meanwhile, Bitcoin's average return during election years is 23.68%.

The upcoming election, CPI reports and subsequent Federal Reserve actions will be closely watched in the crypto market.

In particular, Bitcoin will have an impact on these economic indicators, institutions will begin to show their interest in this new asset class. For example, Susquehanna International reported holding $1.2 billion in Bitcoin across ten ETFs.

This institutional interest reflects confidence in Bitcoin's ability to hedge against inflation and economic instability.

Read more: Bitcoin price prediction for 2024/2025/2030

While the market awaits the CPI report, investors are advised to exercise caution and avoid quick selling. The interplay of inflation data, Federal Reserve policies and market trends will be critical in shaping markets in the coming months.