How Will Bitcoin React to the Upcoming US CPI Report? Potential Impact on $100K Target
Key Highlights:
- Bitcoin dropped 3.72% to $94.8K following Fed Chair Jerome Powell’s comments on quantitative easing.
- The US Consumer Price Index (CPI) report is expected to introduce volatility, with Bitcoin’s reaction depending on whether inflation data meets, exceeds, or falls short of expectations.
- BTC is attempting a recovery, with potential targets at $94.6K, $96.8K, $100K, and $101.5K.
Bitcoin Price Drops Ahead of Key US Inflation Report
Bitcoin experienced a 3.72% drop on Tuesday, falling from $98.4K to $94.8K, with many attributing the decline to Fed Chair Jerome Powell’s statements on easing monetary policy. Despite this, the Federal Reserve has maintained its stance on keeping interest rates steady. However, the upcoming CPI release could put pressure on the Fed to reconsider its approach.
Powell addressed inflation concerns, stating:
“The policy stance is now much looser than before, and the economy remains strong, so there is no need to rush to adjust. Inflation has eased significantly but remains high.”
Why is Bitcoin Down Ahead of the CPI Release?
Bitcoin’s current trading value stands at $96,131, after reaching a daily high of $98,218. The upcoming US CPI report, scheduled for 8:30 AM Eastern Time, is expected to be a major market-moving event for Bitcoin and broader crypto markets.
Current CPI Projections:
- Core CPI MoM: Expected to rise 0.3%, up from the previous 0.2%.
- Headline Inflation YoY: Expected to hold steady at 2.9%.
Bitcoin’s Potential Reactions to CPI Data
Bitcoin and other risk assets could respond in three different ways depending on the CPI outcome:
- CPI Matches Expectations (Neutral Scenario)
- If inflation data aligns with forecasts, the Fed is likely to maintain its current policy stance.
- Investors may remain cautiously optimistic, leading to moderate Bitcoin price fluctuations.
- CPI Exceeds Expectations (Bearish Scenario)
- Higher-than-expected inflation could delay interest rate cuts, creating a risk-off sentiment.
- This would likely strengthen the US dollar and cause Bitcoin to drop further.
- CPI Falls Below Expectations (Bullish Scenario)
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- A lower CPI reading could increase expectations for Fed rate cuts, triggering a Bitcoin rally.
- This scenario could fuel bullish momentum, possibly pushing BTC past $100K.
Key Bitcoin Price Levels to Watch
Bitcoin is currently attempting to rebound from Monday’s $95.2K low. However, due to CPI-driven volatility, a dip to $94.6K remains a possibility before a potential recovery.
Crucial price targets for traders:
- $94.6K – A key level for dip buyers.
- $96.8K – The first resistance level in case of a rebound.
- $100K – The psychological barrier and previous VWAP level.
- $101.5K – A key breakout level; turning this into support could signal a long-term bull run.
The upcoming CPI report, combined with weak job data (143K payrolls), could shape market sentiment in the coming weeks. If inflation remains high, fears of stagflation could weigh on risk assets like Bitcoin and Ethereum. However, if inflation data surprises to the downside, Bitcoin’s path to $100K could accelerate.
