Bitcoin forecast: Can CPI and PPI send BTC to fresh 2026 lows?

Bitcoin is rising on Monday, steadying after steep losses over the past week. However, sentiment remains fragile amid continued institutional selling, rising tensions in the Middle East, and growing expectations that the Federal Reserve could raise interest rates. 

Bitcoin has risen 1% at the start of the week, recovering to 62k after slumping 18% last week in its worst weekly performance so far this year. 

Bitcoin has been hammered by persistent institutional selling over the past four weeks, as reflected in elevated outflows from spot BTC ETFs. 

Institutional demand disappears 

Spot Bitcoin ETFs recorded outflows of $1.72 billion last week, marking the largest weekly outflow since April 2025. This was also the fourth consecutive week of outflows, bringing total withdrawals to $5.4 billion, according to SoSo Value data. 

Institutional demand has weakened as appetite for crypto has faded amid the ongoing conflict in the Middle East and its implications for inflation and interest rates. BTC will struggle to recover while ETFs continue to bleed. 

Inflation worries and Fed rate hike expectations rise 

Increased hostilities and escalating military action in the region, combined with stalled peace talks between the U.S. and Iran, mean hopes of an imminent resolution and the reopening of the Strait of Hormuz are fading. As a result, oil prices, inflation concerns and Treasury yields have all moved higher. 

At the same time, the Federal Reserve has a greater possibility to keep monetary policy restrictive following Friday's stronger-than-expected non-farm payroll report. The data marked a third consecutive month of solid job growth, giving the Fed more room to raise rates if inflation remains elevated. This is typically a challenging backdrop for non-yielding, speculative assets such as Bitcoin. 

Investors have also been rotating into assets with AI exposure amid continued enthusiasm surrounding the sector. However, Bitcoin is finding some relief at the start of the week after the AI rally paused on Friday, with the Philadelphia Semiconductor Index falling 10% in a single session. 

US CPI and PPI ahead of the FOMC next week to set the tone 

Looking ahead, this week's U.S. CPI and PPI reports could prove critical for Bitcoin. Expectations are for inflation to remain above 4%, while producer prices are already running above 6% and the 30-year Treasury yield remains above 5%. 

Signs of sticky inflation could strengthen expectations Fed rate hike expectations, potentially sending Bitcoin towards fresh 2026 lows. These inflation reports are particularly important because they come ahead of the Fed meeting on June 16-17, where policymakers are expected to remove the easing bias. 

With inflation ticking higher, the Fed looking more hawkish, and Trump unable to roll back the situation as he did with tariffs, there seems little reason to be bullish on BTC for now. 

Bitcoin – Technical analysis

After facing rejection at the 200 SMA, Bitcoin rebounded lower, breaking below the 50 SMA and out of the rising channel, to a low of 59.1 k. The hammer candlestick pattern combined with the RSI in overbought territory suggests that a local bottom is in for now.  

Any recovery would need to first rise above 65k before heading towards 70k, the round number and 76k, the falling trend line resistance, and the 50 SMA  

Sellers will need to break below 59k to extend the sell-off towards 55k round number nd 52k, the September 2024 low.