Soft U.S. CPI Report Expected to Influence Bitcoin Price Movement
The U.S. Labor Department will release January's consumer price index (CPI) on Wednesday at 13:30 UTC. Key points include:
- Expected month-on-month increase of 0.3%, down from December's 0.4%
- Annualized CPI projected to match December's 2.9%
- Core inflation forecasted to rise to 0.3% from 0.2%, with annualized reading at 3.1%
- Lower-than-expected data may lead to expectations for Federal Reserve interest rate cuts
- CME's FedWatch tool estimates a 54% chance of at least one rate cut this year
While potential Fed rate cuts could influence Bitcoin (BTC), they may not be enough to break the current consolidation between $90,000 and $110,000 due to forward-looking metrics indicating rising inflation.
Key concerns include:
- Two-year inflation swaps have increased to nearly 2.8%, the highest since early 2023
- Persistent inflation pressures suggest limited progress towards the Fed's 2% target
- Investment banks predict that a soft CPI reading won't shift the Fed's hawkish stance
- Chairman Jerome Powell indicated no urgency in cutting rates
- BlackRock noted ongoing services inflation might keep rates elevated
Should the CPI report exceed expectations, BTC may trend toward the lower end of its trading range.