Bitcoin braces for volatility-filled week with November CPI data release, Fed decision

Bitcoin is likely to experience heightened volatility this week with the upcoming release of November CPI data. BTC price suffered a correction of nearly 4% in the past 24 hours, ahead of the key macroeconomic events scheduled for the week.

Market participants are focused on US inflation data and the Federal Open Market Committee’s (FOMC) monetary policy announcement on Wednesday. 

Also read: Altcoin bull cycle 2023 picks by analyst: Ethereum, ChainLink, Arbitrum, Optimism

Bitcoin holders gear up for upcoming Fed data releases

The economic calendar is filled with macroeconomic data releases that could influence the Greenback and in turn, risk assets like Bitcoin and altcoins. The US CPI report for November, scheduled for release on Tuesday, followed by the FOMC meeting on Wednesday, are the two key events that could determine the direction of Bitcoin price trend. 

The consensus among experts is that the Federal Reserve is unlikely to raise interest rates at the December 13 meeting. A higher-than-expected inflation figure, however, may push up the chances of the Fed increasing interest rates at some point – or of keeping interest rates at current levels for longer – with implications for Bitcoin.

High interest rates have a negative impact on risk assets like Bitcoin. An increase in the chances of a hike, could therefore increase the pressure on BTC price and usher further correction in the asset’s price.

For there to be a material increase in the probabilities of rate hike the CPI would have to come out substantially higher. As things stand, the Core CPI YoY is expected to remain unchanged, at 4% and Headline CPI is expected to reduce by one percentage point, to 3.1% in November. These estimates would have to be roundly beaten to cause in a major shift in expectations of the trajectory of Fed policy, such that BTC would feel the impact. 

An upside surprise in the Core CPI reading, if substantial enough, however could impact Bitcoin price trend and push BTC price lower in the short term. In such a scenario,Bitcoin price could nosedive to support at $40,414, the upper boundary of an imbalance zone.

Once BTC reaches the $40,414 support level, however, it is likely to rebound, eyeing the 10-day Exponential Moving Average (EMA) at $42,311 as a target on its path to the December 8 top of $44,735, on Binance. 

BTC/USDT 1-day chart

In the event that Bitcoin sees a daily candlestick close below the psychological barrier at $40,000, the bullish thesis could be invalidated and BTC price could slip to the 50-day EMA at $37,435.

At the time of writing, Bitcoin price is $42,170 on Binance, down nearly 4% on the day.