A softer U.S. inflation report could boost Bitcoin, but will it be enough to fuel a breakout?
CPI Report Could Influence Bitcoin Price
The U.S. Consumer Price Index (CPI) for January will be released on Wednesday at 13:30 UTC. Analysts expect a 0.3% month-over-month increase, down from 0.4% in December. The core inflation rate, which excludes food and energy, is projected at 3.1% annually, slightly lower than December’s 3.2%.
If inflation comes in lower than expected, it could strengthen expectations for Federal Reserve rate cuts. This scenario might lead to lower Treasury yields and a weaker dollar, making risk assets like Bitcoin (BTC) more attractive.
Will BTC Break Out of Its Trading Range?
While interest rate expectations can impact BTC, they may not be enough to trigger a breakout. Bitcoin has been trading between $90,000 and $110,000, and broader market trends suggest inflation may rise in the coming months.
Two-year inflation swaps have climbed to 2.8%—the highest since early 2023—indicating that markets expect higher inflation ahead. This could limit the Fed’s ability to cut rates aggressively.
Fed’s Cautious Stance Could Weigh on BTC
Federal Reserve Chair Jerome Powell stated on Tuesday that the Fed is in no rush to cut rates. BlackRock and RBC also believe inflation will remain sticky, forcing the Fed to keep rates higher for longer.
If CPI comes in hotter than expected, BTC could test the lower end of its $90K-$110K range as traders adjust their expectations.