Crypto Fundamental Analysis: Restrictive Central Banks Limit Crypto Confidence

September continues to advance and a mixed environment remains evident across the cryptocurrency market, where short-term confidence has struggled to stabilize in a consistent manner. Part of this situation is linked to the latest inflation data released in the United States, which continues to reinforce the possibility of a more aggressive central bank environment over the coming months. This backdrop could continue affecting risk-oriented assets such as cryptocurrencies and, as long as these concerns remain relevant, a growing phase of indecision may continue to characterize market activity in the weeks ahead.

Are More Aggressive Central Banks Returning?

This week has been especially important for assessing the direction of monetary policy among major central banks. The first major event came from the European Central Bank, which decided to raise its deposit rate to 2.5% while also leaving the door open to a more restrictive stance if inflationary pressure continues increasing in the months ahead.

In fact, following this week's decision, market probabilities continue to assign roughly a 61% chance of another rate increase toward 2.75% at the October 28 meeting. This situation reflects the fact that investors continue pricing in a more aggressive ECB over the coming months.