Bitcoin Market’s Trajectory Hinges on U.S. CPI Report Release
The U.S. Consumer Price Index (CPI) report set to be released on Thursday is expected to have a significant impact on the bitcoin market, as investors eagerly await the data to determine the trajectory of the leading cryptocurrency.
Economists surveyed by Dow Jones predict that the CPI will show a 0.1% increase in the cost of living in June, with a 3.1% rise year over year. The core CPI, which excludes food and energy prices, is forecasted to have increased by 0.2% month over month and 3.4% year over year.
If the actual figures align with these estimates, it would signal progress towards the Federal Reserve’s 2% inflation target and could pave the way for the much-anticipated rate cut cycle later this year. The prospect of rate cuts is expected to benefit risk assets like bitcoin, potentially aiding in the cryptocurrency’s price recovery from recent lows.
Analysts are closely watching the CPI data release, as it could have a significant impact on market sentiment. The Federal Reserve has emphasized the need for further progress on inflation before considering rate cuts, but recent signals suggest a growing likelihood of a rate cut in September and possibly another in December.
The response of the U.S. Treasury yield curve to the CPI release will also be closely monitored, as it could influence broader market sentiment, including the bitcoin market. A potential bull steepening of the yield curve, characterized by a faster normalization of an inverted yield curve, could signal economic contraction and risk aversion.
Investment banks like JPMorgan and Citi are already betting on the steepening of the yield curve, indicating a cautious outlook on equities during this period. With political uncertainty in the U.S. and the possibility of a Trump victory, there are concerns about inflation upticks driven by tariffs and increased issuance to fund tax cuts.
Overall, the upcoming CPI report is expected to be a pivotal moment for the bitcoin market, as investors look for clues on the future direction of the cryptocurrency amid changing economic conditions and policy decisions.