Bitcoin Faces Volatility as US CPI Report Nears: Will Prices Plunge?
The cryptocurrency market is on edge as the highly anticipated US Consumer Price Index (CPI) and Producer Price Index (PPI) reports are set for release this week.
With the CPI scheduled for March 12 and the PPI following on March 13, investors are bracing for heightened volatility.
According to a Reuters poll, February’s CPI is expected to rise 0.3%, with Wall Street forecasting a 2.9% annual increase. If inflation surpasses these estimates, it could spark a broad market downturn. Bryant VanCronkhite, senior portfolio manager at Allspring Global Investments, warns:
“A hot CPI print will likely scare the market. The market still wants the Fed to come to the rescue. Until inflation expectations come down, the Fed is handcuffed.”
This CPI data will be pivotal as it comes just days before the Federal Reserve’s March 18-19 policy meeting, influencing decisions on interest rates. The Fed’s stance on rate cuts will be key in shaping Bitcoin’s trajectory.
Federal Reserve’s Policy Stance in Focus
As market participants digest inflation data, all eyes turn to the Federal Reserve’s interest rate strategy. Current projections from the CME FedWatch Tool suggest the Fed will hold rates steady at 4.25%-4.5% during its next meeting. However, Fed funds futures data from LSEG indicates that traders expect up to 70 basis points of rate cuts by December.
Yet, recent comments from Fed Chair Jerome Powell hint at a more cautious approach:
“Our policy stance is now less restrictive than it had been, and the economy remains strong. We do not need to be in a hurry to adjust our policy stance.”
If inflation prints hotter than expected, the Fed might reconsider its outlook, potentially delaying rate cuts or even signaling further hikes. A hawkish stance could weigh heavily on Bitcoin and risk assets.
Key market indicators suggest another turbulent week:
Bitcoin ETFs recorded significant outflows, with $409 million exiting the market.
21Shares’ ARKB led outflows with $160 million, followed by Fidelity’s FBTC losing $154.9 million.
63.13% of Binance Futures traders are currently holding long positions on Bitcoin, signaling optimism among retail investors.
Crypto analyst Crypto Caesar believes this could be the “last bear trap” before a major bullish move. However, with the Fed’s decision looming, the market remains at a critical juncture.
Bitcoin (BTC/USD) Analysis – Bearish Breakdown Confirmed
Bitcoin (BTC) has broken below a key symmetrical triangle pattern, confirming a bearish continuation. Currently trading at $82,601, BTC remains under pressure after failing to hold the $84,766 support level.
The 50 EMA at $86,745 is acting as resistance, reinforcing the downward trend. If Bitcoin fails to reclaim $84,766, further declines toward $79,969 and $76,263 are likely. A breakdown below $76,263 could accelerate losses toward $72,993.
For bulls to regain control, BTC needs to break back above $84,766, with a stronger push required to reclaim $88,559 and shift momentum.
Final Thoughts
Bitcoin’s fate hinges on this week’s inflation data. If CPI and PPI reports confirm persistent inflation, the Fed may delay rate cuts, triggering another crypto downturn. However, if inflation cools, markets could rally, fueling Bitcoin’s next leg up.
Investors should prepare for volatility and closely monitor macroeconomic indicators to navigate potential market swings.
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals