Bitcoin Price Threatened By Inflation, CPI Print Sheds More Light

The price of Bitcoin, hovering between $18,800 and $19,500, is truncating short and long positions. The current dynamics of the market are dictated by macro forces pushing BTC to extremes as major economic events approach.

The September Consumer Price Index (CPI) is poised to serve as one of these events. Volatility spiked after these reports, which the US Federal Reserve (Fed) used as a benchmark for inflation over the past few months.

At the time of writing, Bitcoin’s price is trading at $19,100, having been sideways for the past 24 hours and losing 6% over the past week. BTC’s price action has dragged the cryptocurrency market as market participants in digital and traditional assets brace for volatility.

Bitcoin Price Squeeze Included? CPI print is the decisive factor

Caleb Franzen, Senior Market Analyst at Cubic Analytics, said: share His thoughts on the next CPI report. Today, the US government released one of the country’s most important inflation indicators, the Producer Price Index.

PPI accelerated from 6.5% in August to 6.8% in September, better than expected and suggesting higher inflation reflected in future CPI printing, Franzen said. PPI is far from its yearly low of 9.2%, but the uptrend reflects inflation’s “stickiness,” as analysts said, suggesting the Fed will adopt a more aggressive monetary policy. may suggest.

PPI Final Demand Services accelerated year-over-year with the latest Producer Price Index data.

Aug 2022 YoY +6.5%
+6.8% YoY in September 2022

While down significantly from its peak of +9.2% in March 2022, it underscores the persistence and impact of wages. pic.twitter.com/zrlzfS3SNT

— Caleb Franzen (@CalebFranzen) October 12, 2022

In that sense, looking more deeply at the factors that contribute to high inflation, Franzen focuses on the “tug of war” between the forces of inflation and deflation. Overall, lower energy prices and lower oil and fossil fuel prices could help ease inflation.

However, this scenario is currently uncertain and will impact Federal Reserve Board decisions, adversely affecting the price of Bitcoin and the performance of legacy financial assets.This upcoming CPI reflects this uncertainty. Analysts argued that it could be.

We expect the CPI m/m to remain relatively unchanged, almost certainly at ±0.2%. YoY base +8.0% or more is almost certain. However, we expect Core CPI, Median CPI and Trimmed Average CPI to accelerate relative to his August results.

Will high inflation become the new normal?

This allows the price of Bitcoin to experience a relief rally in a short time frame that dissipates the current uncertainty in the nascent asset class. It will continue to function as a strong headwind.

After the CPI print, the next Federal Open Market Committee meeting will bring more volatility to the market. As pointed out by trading desk QCP Capital, these events led to a positive performance for the Bitcoin price.

Below, the chart of the BTC/USD trading pair during the FOMC period shows a short-term rally followed by a major crash. But as the Fed becomes more hawkish and inflation picks up, these sudden price actions become less powerful.

Can BTC finally break out of the current range or just see another short-term rally?