- Bitcoin price is trading above $50,000 after significant purchases of spot Bitcoin ETFs, triggering a significant rally in the crypto market.
- Wall Street giants, especially after the recent CPI revision, are anticipating a significant drop in both CPI and core CPI inflation.
- JPMorgan, Bank of America, UBS, Morgan Stanley, Citigroup, Deutsche Bank, Nomura, and RBC predict a decrease in headline CPI inflation from 3.4% to 2.9%.
Critical inflation reports in the US will be released today before the markets open: How will Bitcoin price be affected by the reports?
US Inflation Reports to be Released Today
Cryptocurrency and stock market investors are eagerly awaiting the January Consumer Price Index (CPI) inflation data to be released by the US Bureau of Labor Statistics for more clues on Fed interest rate cuts. Bitcoin price is trading above $50,000 after significant purchases of spot Bitcoin ETFs, triggering a significant rally in the crypto market.
Wall Street giants, especially after the recent CPI revision, are anticipating a significant drop in both CPI and core CPI inflation. While Fed officials remain cautious about interest rate cuts in March, upcoming economic data will provide better guidance on the monetary policy outlook.
JPMorgan, Bank of America, UBS, Morgan Stanley, Citigroup, Deutsche Bank, Nomura, and RBC predict a decrease in headline CPI inflation from 3.4% to 2.9%. However, Barclays, Goldman Sachs, TD Securities, and Wells Fargo expect a decline but anticipate it to be at 3%.
For core CPI, experts from banks such as Citigroup, Deutsche Bank, JPMorgan, Morgan Stanley, and UBS anticipate a drop from 3.9% to 3.7%. Additionally, Bank of America, Barclays, TD Securities, and Nomura expect 3.8%, while Goldman Sachs predicts a higher annual core rate, resulting in a 3.9% decrease.
Therefore, the market expects the annual inflation rate to decrease to 2.9% in January, making it the lowest value seen since March 2021. Moreover, the annual core inflation is expected to slow to 3.7%, the lowest value seen since April 2021. Monthly rate estimates for both CPI and core CPI remain steady at 0.2% and 0.3%, respectively.
Bitcoin Price to Reach $55,000?
Decreasing CPI inflation will provide the US Federal Reserve with the possibility of considering interest rate cuts in the coming months. The CME FedWatch Tool predicts a 25-basis-point interest rate cut in May with a probability of up to 50%, and this probability is even higher in June.
Macro data is currently showing volatility, making it essential for traders to monitor. The US Dollar Index (DXY) is starting to fall below 104 from the 104.25 level. Crypto traders expect a drop below 104 for further upward movement in BTC price.
Moreover, the 10-year Treasury yield (US10Y) is decreasing but still hovering above 4%. Recent treasury bond auctions and the cautious outlook of Fed officials on interest rate cuts affect this situation.
The derivatives market looks strong, as futures and options traders are placing new bets on further upside in BTC price. Bitcoin futures open positions increased by 7.20% to reach $47.32 billion, and futures trading volume increased by 70% in the last 24 hours.
Total open positions in options increased by 7.20% in CME BTC Futures and 4% after significant inflows into spot Bitcoin ETFs, reaching $24.29 billion. Options traders seem to be highly optimistic about bets for $56,000, $60,000, and even $70,000 for February. This indicates that BTC price is likely to stay above $50,000 after the release of the CPI.
BTC price has increased by 4% in the last 24 hours and is currently trading at $50,100. The 24-hour low and high values are $47,745 and $50,358, respectively. Additionally, trading volume has nearly doubled in the last 24 hours, indicating increased interest among traders.
