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Bitcoin is preparing for the release of the US Consumer Price Index (CPI) for September on October 24 – the first important macroeconomic data since the US federal government shutdown.
“The Kobeissi Letter” analysts emphasized the importance of this data update, notingThis is the first time CPI data has been released on a Friday since January 2018, and it is only 5 days before the Federal Reserve meeting on October 29.
In addition, as the U.S. Department of Labor has suspended the release of all other important economic data until the government shutdown is over,The CPI report will be the Fed’s only key measure of inflation.
This “single indicator reliance” increases the importance of the data, and there will be no new employment, non-farm payrolls or producer price data to balance the overall economic picture.
The latest CPI report showed that the U.S. inflation rate was 2.9% in August, a slight increase from 2.7% in the previous month.
Based on this, Wells Fargo economists currently expect the inflation rate to rise slightly to 3.1% in September, still within a range consistent with “gradual deinflation.”
Core CPI, which excludes food and energy prices, is expected to remain stable.This shows that although inflationary pressures are easing, they have not completely disappeared..
Across financial markets, traders have begun to prepare for potential policy easing.According to the CME Group’s (CME) FedWatch Tool, futures data show that the probability of the Fed cutting interest rates at the October 29 meeting is 99%, and the probability of another rate cut in December is 85%.
It is worth noting that if the CPI data is lower than expected (that is, inflation slows down), it may further strengthen this easing expectation and weaken the trend of the US dollar.
And if the data is higher than expected (that is, inflation exceeds expectations), speculation on interest rate hikes may briefly resume.
Analysts at Kautious Data said that the impact of CPI on Bitcoin is still direct, because currently “macro signals are relatively scarce, which may provide a short-term bullish basis for the cryptocurrency narrative, while also increasing tail risks to the broader market.”
The agency noted thatIf the core CPI rises below 0.3% month-on-month (ie, inflation slows), it will support dovish policy expectations, put pressure on the US dollar, and be beneficial to assets such as gold, stocks, and Bitcoin..
However, if inflation data shows “stickiness” (that is, inflation remains high), especially if service prices and housing prices increase by more than 0.4% month-on-month, it may boost the US dollar and put pressure on risk assets (including Bitcoin).
The agency also pointed out that the cryptocurrency market usually reacts by “rising before the release of data and selling out after the data is released.” This phenomenon is often accompanied by a surge in volatility and a reversal of capital flows.
Meanwhile, Dean Chen, an analyst at digital asset firm Bitunix, said,Market reaction will depend on how investors reassess risks following the data release.
He pointed out that if the data is in line with expectations, the market may maintain the current narrative of “high interest rates but long-term stability” and Bitcoin may continue to consolidate near recent highs.
However, if the core CPI data is stronger than expected, it may push up U.S. Treasury yields and the U.S. dollar, triggering a short-term correction in Bitcoin from its recent high range.
In addition, Dean Chen added that if the CPI data is lower than expected (inflation cools), ETF fund inflows may restart, pushing Bitcoin towards the range of US$117,000-120,000.
If the data is higher than expected (inflation heats up), it may prompt funds to flow back to safe-haven assets and test Bitcoin’s support level near $100,000.
He further said: “Traders should pay attention to the real-time trend of U.S. Treasury yields and the U.S. dollar after the data is released: if both rise at the same time, it will put pressure on Bitcoin; if both fall back, it may reignite risk appetite.”
“Volatility will remain elevated in this environment, and the persistence of ETF inflows will determine whether Bitcoin can regain upward momentum following the release of the data.”
