Will Bitcoin Retreat? Wall Street, Kalshi’s US CPI Inflation Estimate as Oil Prices Rebound

Crypto market participants are bracing for US CPI inflation data today, with Bitcoin sliding more than 2% to below $69,500 ahead of the release. Oil prices’ rebound is keeping traders uncertain about market direction, as the US-Iran war narrative has turned into an oil crisis.

Wall Street giants and the Kalshi prediction market expect CPI inflation to rise amid renewed inflation jitters. Bitcoin price could fall below $69,000 if CPI inflation comes above expectations.

Wall Street Expectations on US CPI Inflation

The U.S. Bureau of Labor Statistics will release the February US CPI inflation report on March 11. Economists’ forecasts point to a 0.3% month-over-month (MoM) rise in inflation, up from 0.2% in January, with annual inflation expected to hold steady at 2.4%, similar to January headline CPI inflation data.

Meanwhile, core CPI is projected at 0.2% MoM, lower than 0.3% previously. The core inflation, which excludes food and energy, is expected to have remained unchanged at 2.5%, the same as in January and near its lowest level since 2021.

The Wall Street Journal’s Nick Timiraos highlighted that US CPI inflation mostly remained sideways in February, holding near the lowest 12-month rates in five years. He noted that it could remain sideways “at least until April, when the data collection/imputation distortions from the Oct govt shutdown could fully unwind.”

JPMorgan, Citigroup, Morgan Stanley, Nomura and Moody’s expect headline CPI inflation to come in higher at 2.5%, above forecasts of 2.4%. A higher inflation reading is likely as oil prices rebound, after falling 13%, amid reports that Iran had deployed mines in the Strait of Hormuz.

Meanwhile, all financial services firms except Goldman Sachs see Core CPI inflation remaining unchanged at 2.5%. Goldman expects a drop in both headline and core inflation in February. CME FedWatch Tools is currently showing odds of two Fed rate cuts this year.

Kalshi Prediction Market Data on CPI Inflation

Kalshi data on CPI Inflation estimates also signal caution as traders bet for more than 0.3% forecast for the monthly headline CPI. However, more traders are expecting the annual headline CPI to come in at 2.4%.

Traders are mostly expecting inflation to remain stable despite sky-high oil prices. Core CPI bets are in line with Wall Street and economists’ estimates.

Bitcoin and crypto market participants are tracking prediction markets after a US Federal Reserve study found that Kashi data on FOMC rate decisions are more accurate than Fed funds futures. Prediction markets have perfectly predicted key macroeconomic variables such as CPI inflation and GDP.

Will Bitcoin Fall or Rebound?

Despite a slight increase in liquidity, lower funding rates, and tailwinds such as the rise in US existing home sales, Bitcoin fell more than 2% to below $69,500 today.

BTC price is currently trading at $69,478, with a 24-hour low and high of $69,327 and $71,770, respectively. Trading volume has also decreased by 6% ahead of the US CPI inflation release.

Bitcoin is at an inflection point and a hotter CPI print combined with rising oil prices could trigger a deeper fall, testing lower supports amid broader crypto market caution. BTC options data showing traders are anticipating a fall below $69,000 in the next few days.

CryptoQuant’s Bitcoin Supply in Loss metric indicates rising market stress. Historical patterns suggest that the current level may mark the early bear market phase rather than the final bottom.

Analysts turned skeptical again over a rebound as Bitcoin remains range-bound between $71,827 and $62,772. Ted Pillows shared a day chart showing BTC fractal looking very similar to 2022. If the pattern played out similar, Bitcoin could crash below $55K.