Median Consumer Price Index (Algorand)

Predictive Strength

Negligible

Algorand historically had ▲ 23.64% 30 days returns when Median Consumer Price Index was▆ Very High (0.8 - 1). It indicates higher than average expected returns.

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ALGO Price with Median Consumer Price Index

Factor Plot

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▆ Very Low▆ Low▆ Moderate▆ High▆ Very High

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Our Methodology

Predictive Strength

Negligible

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Potential Edge

Liquidity Gatekeeper for Risk Assets

CPI data directly informs Federal Reserve rate decisions, which dictate global liquidity flows. Higher-than-expected CPI readings historically correlate with:

Reduced crypto inflows as investors pivot to yield-bearing traditional assets
Margin compression for leveraged traders, accelerating deleveraging cycles in crypto derivatives markets

Conversely, CPI prints below expectations may trigger:

Anticipatory buying of Bitcoin as a "policy put" against Fed dovishness
Reallocation from bonds/stocks into crypto, particularly altcoins with higher beta

Bitcoin's 2022–2024 performance questioned its "digital gold" thesis.

Backtest (Strategy Performance) - Strategy

Strategy Yearly Returns (CAGR)

100.00%

Sharpe Ratio

1.00

Max Drawdown

100.00%

Beta

1.00

Volatility

76.31%

To understand a predictive factors predictive power, we create a simple long/short strategy and simulate its past performance (with daily rebalancing):

Long when the predictive factor is above 0, with a position size equivalent to the predictive factor value.
Short when the predictive factor is below 0, with a position size equivalent to the predictive factor value.

The strategy is rebalanced daily, on a continuous basis. There are 0.5% transaction costs applied on each position adjustment.

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