Key Points
- Bitcoin’s price is expected to break out from its current consolidation range due to the forthcoming CPI data.
- The CPI report’s influence on the Federal Reserve’s interest rates could significantly impact Bitcoin’s price.
Bitcoin is speculated to break free from its present consolidation range due to the upcoming release of the Consumer Price Index (CPI) data. This anticipation is driven by the crypto market’s close monitoring of the January CPI data release by the U.S. Labor Department.
The CPI report is set to be unveiled at 13:30 UTC, and it is predicted to show a slight month-on-month increase of 0.3%, a marginal decrease from December’s 0.4%.
Impact of CPI Report on Federal Reserve’s Decisions
The CPI data will likely play a pivotal role in determining the Federal Reserve’s next move concerning interest rates. Presently, the CME’s FedWatch tool indicates a 54% likelihood of the Fed either lowering the rates or maintaining them as they are for this year.
If the CPI report’s results are lower than anticipated, it could potentially cause a decrease in Treasury yields and a weaker U.S. dollar. These outcomes could possibly lead to an increased demand for riskier assets such as Bitcoin, which has been consolidating between $90,000 and $110,000 recently.
Investor Anticipation and Inflation Indicators
In a recent post by Martinez, he noted that the “BTC accumulation trend score is near zero, signaling a period of consolidation. A shift in demand here could set the stage for the next big move!” This implies that investors are likely waiting for a catalyst to trigger a price breakout, and the upcoming CPI report could potentially serve as that catalyst.
Investors are optimistic that a positive CPI report could provide a boost to Bitcoin. However, future indicators of inflation suggest that higher inflation could be imminent. This could restrict the Federal Reserve’s ability to drastically reduce rates, thereby tempering expectations for a sustained Bitcoin rally.