Bitcoin Market Focuses on Today’s US Inflation Data: How Will Prices Be Affected?

• With ongoing inflation concerns and scrutiny over the Federal Reserve’s next moves, market participants eagerly await the CPI figures’ impact on BTC’s price trajectory.
• Federal Reserve (Fed) members have recently taken a hawkish stance in public and expressed concerns about inflation resurging alongside rising core inflation.
• Wage increases may contribute to the escalating cycle of core inflation. Despite core CPI reaching 5.3% in May, experts now anticipate a gradual decline to 5% in June.

US inflation data is being released today; expectations from banking giant JPMorgan and potential scenarios for Bitcoin price.

US Inflation Data Being Released Today

The eagerly awaited US Consumer Price Index (CPI) data for June, set to be announced at 12:30 UTC today, puts the Bitcoin (BTC) market at a significant crossroads. With ongoing inflation concerns and scrutiny over the Federal Reserve’s next moves, market participants eagerly await the CPI figures’ impact on BTC’s price trajectory.

In recent months, inflationary pressures have become a source of concern, capturing the attention of both investors and economists. Inflation is rapidly cooling down, with a further expected drop to 3.1% (from 4.0% in May). Monthly inflation is expected to be 0.3% (May was 0.1%).

Federal Reserve (Fed) members have recently taken a hawkish stance in public and expressed concerns about inflation resurging alongside rising core inflation. At the heart of the concern lies inflation receding primarily due to the resolution of supply chain issues while core inflation remains elevated.

Wage increases may contribute to the escalating cycle of core inflation. Despite core CPI reaching 5.3% in May, experts now anticipate a gradual decline to 5% in June. While this would be progress, it also demonstrates how persistent core inflation is currently. A sharp unexpected drop would, therefore, be highly bullish.

A surprise in core inflation could have a significant impact on the Federal Reserve’s next interest rate hike decision. The next FOMC meeting is scheduled for July 26th. Currently, CME FedWatch predicts a 25 basis point interest rate hike with 92.4% probability, which is holding back the markets. If core CPI surprises on the downside, the likelihood of this happening would likely diminish significantly.

As usual, JPMorgan has prepared a game plan for the S&P 500 in light of today’s Consumer Price Index announcement. According to JPMorgan, the highest probability, at 45%, is for CPI to drop to 3-3.2%. The S&P 500 could then see gains between 0.5% and 0.75%.

The second-highest probability, given by JPMorgan, is for CPI to drop to 2.8% to 2.9% (25%). In this case, the S&P 500 could rise between 1.5% and 1.75%. Furthermore, the banking giant assigns a 10% chance for CPI to drop to 2.7% or below, and only a 20% chance for data exceeding the projected range (above 3.3%).

Potential Scenarios for Bitcoin

If the CPI figures come out higher than expected and indicate increased inflationary pressures, BTC may face a temporary retreat. If CPI falls within the predicted range, BTC’s response could be moderate. Investors will closely monitor the data for signs of sustained inflation that could potentially lead to a slight decrease in Bitcoin’s price.

A lower-than-expected CPI figure could trigger an upward trend in BTC, suggesting a easing of inflationary pressures. Investors may perceive this as a positive signal indicating the Fed’s continued interest rate hikes. Lower core CPI data than expected has the potential to provide much-needed support for Bitcoin.