How Will Bitcoin Price React to US CPI Announcement?

Bitcoin price suffered a 3.72% correction on Tuesday, dropping from $98.4K to $94.8K. Many attributed this sudden collapse to Fed Chairman Powell’s comment easing. However, the Fed’s stance on cutting rates remains firm, as noted on February 11. However, the upcoming US CPI might put additional pressure on the Fed to rethink its decision on interest rates.

Powell stated,

“The policy stance is now much looser than before, and the economy remains strong, so there is no need to rush to adjust the policy stance. Inflation has eased significantly, but remains high.”

Why is Bitcoin Price Today Down 1.83% Ahead of US CPI?

On Tuesday, Fed Chairman Jerome Powell’s comments on quantitative easing triggered a correction in Bitcoin price. Powell added,

“WE WOULD USE QUANTITATIVE EASING ONLY WHEN RATES ARE AT ZERO”

As a result, BTC’s value today trades at $97,652.0 on 11 PM after hitting a daily high of $98,098.0 and is down 1.83% on October 8.

Let’s find out.

*bitcoin price updated as of 11 PM.

The upcoming US Consumer Price Index (CPI)  print today at 8:30 a.m. Eastern will play a critical role in setting the tone for Bitcoin and cryptocurrency markets in the short term. According to TradingEconomics, the Core US CPI MoM consensus is 0.3% compared to the previous print of 0.2%. The consensus surrounding headline inflation is that it remains the same at 2.9%.

How Will Bitcoin (BTC) React to US CPI Prints?

Investors can expect three outlooks: higher than consensus, equal to consensus, and lower than consensus. Each outcome could profoundly impact risk-on assets like Bitcoin, cryptocurrencies, or stock markets, depending on market conditions.

CPI Matches Consensus, i.e., Headline and Core MoM/YoY as expected

In this case, the Fed will likely maintain the current rate trajectory as data align with forecasts. With easing stagflation fears, investor sentiment would be mildly optimistic.

CPI Higher Than Consensus

This outlook would create a hawkish sentiment and delay the rate cuts, causing a risk-off scenario in which the US dollar strengthens and the Bitcoin price collapses.

CPI Lower Than Consensus

If CPI comes in lower than expectations, it could kickstart a bull run as it would accelerate the rate cut expectations, causing the price of Bitcoin and other risk-on assets to rally.

The monthly Core CPI MoM consensus of 0.3% will likely drive immediate Bitcoin price reactions with a volatility spike. A higher print risks reigniting fears of policy tightening, while a lower print could fuel bets on Fed easing. Including the weak jobs data of 143K payrolls provides a better outlook for the upcoming CPI event. A low CPI would offset growth concerns, but a high CPI could amplify stagflation anxieties, disproportionately hurting risk assets like Bitcoin (BTC) and Ethereum (ETH). In such a case, Bitcoin price prediction suggests $100K is the most anticipated level to watch.

Key Price Levels to Watch Ahead of Inflation Report

Bitcoin price has swept Monday’s low of $95.2K and is currently attempting to move higher. However, technicals suggest that a sweep of $94.6K will occur due to CPI-induced volatility. Short-term traders looking to buy the dip can do so at $94.6K. The subsequent rally could push BTC to revisit POC at $96.8K, previous month VWAP at $100K and finally the range high at $101.5K. These are key take-profit levels. Only a flip of $101.5K into a support level could open the idea of a prolonged bull run and new ATHs.