Upcoming US CPI Release May Set Bitcoin’s Price Trajectory

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As dawn breaks tomorrow, May 15th, the financial world will hold its breath, poised at 8:30 am ET, for the release of the highly anticipated US Consumer Price Index (CPI) data. Given Bitcoin’s recent behavior – a seeming response to macroeconomic developments – pundits propose this crucial inflation indicator may significantly influence the cryptocurrency’s price trajectory.

The CPI, a barometer of inflation, meticulously monitors the price fluctuations of a comprehensive clutch of consumer goods and services. The forthcoming report is grabbing particular attention. This intrigue has been incited by the preceding three months witnessing inflation data exceed market predictions. As analysts foresee a minor relaxation in April’s inflation rates, the subsequent effects on monetary policy and financial market dynamics could be considerable.

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Zooming in on the specifics, economists anticipate an annual rise of 3.4% in April’s CPI, which marks a marginal decline from 3.5% in the preceding month. On a monthly scale, the growth rate is expected to decelerate to 0.3% from the previous 0.4%.

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Further reinforcing this trending slowdown, the predictions echo in the data for the core CPI, which excludes the more volatile components of food and energy prices. Forecasts suggest this may slip from 3.8% to 3.6% year-on-year, representing the lowest annual core inflation since April 2021. A similar deceleration to 0.3% from 0.4% is projected for the monthly core CPI increment.

Beyond the looming release, economists at Goldman Sachs are forecasting that the core CPI will persist in exhibiting disinflationary tendencies in the coming months. They predict that monthly core CPI inflation will oscillate between 0.25% and 0.30% before subsiding to around 0.2% by the end of 2024. Moreover, the year-over-year core CPI is assumed to stabilize around 3.5% with core Personal Consumption Expenditures (PCE) inflation, another bellwether monitored by the Federal Reserve, anticipated to reach 2.7% by December 2024.

It is well-established that CPI data exerts considerable influence on financial market dynamics, typically overreaching the impact of the Producer Price Index (PPI). However, the true repercussions for the financial markets may only become apparent once the forthcoming CPI and prior day’s PPI reports have undergone a thorough analysis.

Advising investors on how to interpret this financial tide, respected crypto analyst Ted recently sounded an alarm bell, warning that the market may react more distinctly than customary if there is a failure to meet expectations.

Ever since the correlation between inflation and the Federal Reserve policy and the response of the Bitcoin and crypto markets surfaced to the public consciousness, the prevalent consensus insists that milder inflation could culminate in more lenient monetary policies. These policies, in general, are amiable to risk assets like Bitcoin, potentially influencing their prices to climb.

As Bitcoin trades at $61,628 at the time of reporting, seasoned market followers keenly await the widely monitored US CPI data, with bated breath and calculated predictions. Speculation brews for another roller-coaster ride in the ever-dynamic world of cryptocurrencies. Is another precipitous Bitcoin climb at the horizon? Only time, coupled with the impending CPI data, will reveal.