Bitcoin price coils for the next move as investors await CPI Inflation data release

US Consumer Price Index (CPI) data release is almost here, slated for May 10 at 12:30 GMT. All eyes in the market stand in anticipation, including the crypto market. Bitcoin price is pushing the breaks as investors wait for Federal Reserve’s (Fed) announcement that could determine the next move for BTC and the wider market.

Also Read: Bitcoin metrics hit an all-time high ahead of the US Federal Reserve’s rate decision

US CPI Inflation data overview

US CPI, a closely observed report on the country’s inflation, is expected to show that consumer prices remained elevated in April, which would be consistent with the levels witnessed in March. Accordingly, last month’s CPI is expected to rise 5% over the year before, in tandem with the annual gain recorded in March.  If the CPI comes in month-over-month, the regular CPI, the expected is a 0.4% rise.

Regardless, even if the forecast is true, the increase would remain above the Fed’s 2% target, which has inspired recent moves to raise interest rates in efforts to bring down inflation. On May 3, during the Federal Open Market Committee (FOMC) meeting, the Fed hinted at a possible pause in hikes, citing intentions to evaluate incoming data before the June meeting.

It is worth mentioning that there will be one more CPI release before the next FOMC meeting, with June’s report released the day before the Fed rate decision.

Take note, however, that the relationship between the actual and forecasted CPI reading could have a significant influence on Bitcoin price, rather than the reading in itself. 

Implications for the crypto market

The Bitcoin price rally to the $30,000 level will be put to the test with the release of US CPI data. Bulls are cautious but optimistic ahead of the data release, as it will determine the magnitude of the next interest rate increase by the Fed. 

BTC bears pulled Bitcoin price down to a critical support level around $27,221, and now the king crypto lacks directional bias and is moving sideways. As has been the case before, the first reaction expected from market players would be a fake move before a correction. This explains why most successful traders do not trade on CPI days, but wait for the market to settle.

Based on the overall outlook, Bitcoin price could make a fake-out above, potentially reaching above $30,441 before a pullback to resume the downtrend until the Summer months when things tend to slow down. 

A higher-than-expected increase in monthly CPI will likely make the Fed reconsider its monetary stand, provoking a US Dollar buying spree across the board. This would be detrimental and therefore bearish for Bitcoin and crypto at large.

Amid a rather fixed macro backdrop over the past few weeks, some eyes will also be on Binance exchange following its recent comments about Bitcoin network traffic. As BTC appears stuck within a trading range, having a de-risking moment on Wall Street could suffice in sending cryptos toward the lows seen in mid-March.

BTC/USDT 1-Day Chart

Conversely, a lower-than-expected increase in monthly CPI will see the market position for a dovish Fed policy shift, putting the crypto market under renewed buying pressure.

As investors await the release of the April CPI later today for clues about the Fed’s next monetary policy decision, Bitcoin price could be ready for a breakout. Investors should wait for confirmation in the CPI reading.