Demand for bitcoin (BTC) has been declining this week as an inflation report from the major financial power approaches. This is the consumer price index (CPI) of the United States.
This report will be published tomorrow, Thursday, October 10, at 12:30 PM (UTC), something that could stir volatility in financial markets. Lower inflation would imply greater liquidity in the economy, which is why this result usually drives an upward reaction. On the other hand, in the event of an inflationary increase, the opposite could be seen.
Expectations revolve around the annual CPI falling from 2.5% to 2.3%according to data polled in the explorer Investing. Therefore, an optimistic response is possible if that outcome or a minor one occurs, as opposed to a major one that could cause concern.
“Bitcoin traders are awaiting this week’s CPI data,” warns investor and writer, Anndy Lian. The reason for this is that they can influence the decisions of the Federal Reserve (Fed), Central Bank of the United States, on interest rates, as reported by CriptoNoticias.
“If the CPI figures are higher than expected, they could indicate an increase in inflation, potentially restricting the Federal Reserve’s ability to reduce interest rates further,” he elaborates. “This situation could reduce the probability of a significant increase in the value of bitcoin,” he adds.
In the past, bitcoin has shown high volatility in response to CPI data. The specialist clarifies that positive results, which reflect a solid economic environment, have often caused the currency to rise. In contrast, it indicates that the opposite may raise concerns about tighter monetary policy, which could affect BTC.
The market shows a tense calm
The price of bitcoin has been posting increasingly lower daily highs so far this week. Meanwhile, it maintains support around $62,000 (USD), exhibiting a tense calm as the economic powerhouse’s CPI result approaches.
The price behavior has been a product in part of the flows of bitcoin exchange-traded funds (ETFs) in the United States. These registered inflows of USD 235 million on Monday and outflows of USD 18 million yesterday.
Anyway, according to Lian, Anticipation of a lower CPI has already impacted the price of bitcoinas it has recovered from USD 60,000 last week. Therefore, he believes that investors are positioning themselves for a possible rebound.
