What to Expect From Bitcoin Today Ahead of US CPI?

With the US Consumer Price Index (CPI) set to release September data at 8:30 am ET, investors expect heightened volatility. The September US inflation data will set the stage for the Federal Reserve’s upcoming interest rate decision and impact risk-on assets like Bitcoin, Ethereum, stock markets, etc.

Bitcoin’s (BTC) 5% crash in the past ten days has stunned crypto investors who were expecting October to provide a bullish break. This price action proves that history doesn’t always repeat or rhyme. However, with this macroeconomic event, Bitcoin’s directional bias could shift.

Let’s understand What US CPI or inflation is and how this macroeconomic data point impacts risk-on assets.

What Can Bitcoin Expect From US CPI Today

Bitcoin will likely experience short-term volatility after releasing the US CPI or inflation data. There is a high chance of a wick to the upside, but the eventual directional bias remains bearish until BTC flips the $65K resistant level.

What Is Inflation Data?

The US CPI or inflation data measures the average change in prices of a basket of goods and services consumed by an average American. The CPI data is released monthly by the Bureau of Labor Statistics (BLS) and serves as a key inflation gauge.

How Does US CPI Affect Bitcoin?

While the actual inflation data is important, how far this number deviates from expectations is something that investors need to watch. Generally, a hotter-than-expected release raises inflation concerns and could push investors to prefer safe-haven assets like Gold, precious metals, government bonds, etc. As a result, higher inflation data is bearish for risk-on assets like stocks and cryptocurrencies. The second impact is that rising inflation could push the central banks to increase interest rates to discourage borrowing and reduce liquidity in risk-on assets as a result.

On the other hand, lower inflation data promotes borrowing and increases liquidity in risk-on markets, leading to a rally. 

The inflation data for August was 2.5% and the consensus or expectation is at 2.3%. Here are some possible outcomes depending on the inflation data.

1. Inflation comes in hotter-than-expectations: Investors can expect Bitcoin price to crash.
2. Inflation meets expectations: Bitcoin is likely going to continue its consolidation.
3. Inflation is lower than expectations: This outlook will help boost risk-on assets like Bitcoin and potentially kickstart the October rally.

Bitcoin Price Analysis: BTC Takes a Breather After 6.40% Crash

As explained in a previous article, Bitcoin crashed 6.40% to $60.3K after testing the $63.9K to $65K. Going forward, investors can expect a short-term recovery rally that pushes BTC up to $61.5K before continuing its downtrend.

The RSI has slipped below the 50 mean level due to the recent crash, but is yet to tag the oversold level. A bounce to 61.5K could see a retest of the mean level, which will reveal the next step for BTC. Rejection here could further strengthen the previous Bitcoin price forecast that hints at a breakdown of $60.3K followed by a retest of $57.2K to $57.9K.

However, if BTC price flips the $61.8K resistance into a support floor, it will suggest a resurgence of bulls. This outlook would promote a further climb to revisit the $64K hurdle. Flipping the $65K resistance level will confirm the restart of the bull run and potentially propel Bitcoin to revisit the $70K psychological level.