• Bitcoin price suffers a rejection at $28,485, dropping 6% over last 10 days.
  • The BTC correction comes ahead of the US CPI on Thursday, which could add more volatility to the current market outlook.
  • There might be a minor pullback to the resistance level, ranging from roughly $27,300 to 27,400. 

Bitcoin (BTC) price has remained relatively stable at around $28,000 for the past few days but has undergone selling in the last 24 hours. The United States Consumer Price Index (CPI) will be released on Thursday at 12:30 GMT, and this event is likely to cause a further spike in volatility.

Also read: Week ahead: Fed speech and NFP likely to dictate crypto market moves this week

What is the CPI and why does it matter?

The CPI, as the name suggests, is a price index of the average market basket of consumer goods and services. Changes in CPI are used to measure inflation. 

Since the pandemic, Bitcoin price action has been extremely sensitive to US macroeconomic events due to the ebb and flow of liquidity, aka Greenbacks. Hence, the US CPI, as well as the US Nonfarm Payrolls (NFP), are a few macroeconomic events that have a high influence on Bitcoin price. 

Depending on the headline inflation number, the interest rates in the US are going to be changed by the Federal Reserve, which further affects the flow of US Dollars and Bitcoin price as a result. The NFP numbers showed an addition of 336,000 jobs in September, which was a huge upside surprise for the Fed. The economists had been expecting a slowdown in new hiring. Hence, the pressure is already on the Fed to tame inflation, and the CPI release on Thursday will be another key event that will make or break the Fed’s decision to raise or keep interest rates steady. 

Currently, analysts are expecting the headline inflation number to come in at 3.6%, slightly lower than the previous month’s number of 3.7%. 

What to expect from US CPI? 

Before getting into what to expect from the US CPI, let’s recap important events 

  • PCE Price Index YoY (Actual vs. Forecast): 3.5% vs. 3.5%
  • Nonfarm Payrolls: 336K vs. 170K
  • Increasing inflation numbers for July and August
  • Federal Reserve: In September, the Fed did not raise rates, but Chairman Jerome Powell mentioned that “inflation has moderated” and that expectations “appear well-anchored.” Powell also added they were “prepared to raise rates further if appropriate."

In the September meeting, the chairman also mentioned that they will keep rates restrictive until they are confident that inflation is moving down to 2%.

With all these key points in mind, let us explore possible outcomes.

US CPI remains the same at 3.7%:  This probability is not high, considering that the inflation numbers spiked in July and August due to a 10% hike in gas prices.

This development could cause a short-term rally in the US Dollar, causing Gold and stocks to suffer, albeit in the short term. Bitcoin (BTC) price, however, might dip in the short-term but recover the losses quickly. 

US CPI comes in greater than 3.7%: This development would suggest a third-consecutive increase in inflation and catalyze a US Dollar rally. The spike in inflation would cause a risk-off from investors, causing Gold, stocks and Bitcoin to tumble. 

US CPI comes in lower than 3.7% or 3.6%: In such a case, the US Dollar would not see strong demand, which would allow the risk-on assets to rally. 


Bitcoin key price levels to watch for CPI traders

  • Overhead resistance level, extending from $27,300 to $27,400.
  • Key support level, extending from $26,400 to $26,500. 

BTC/USDT 1-day chart

BTC/USDT 1-day chart

Depending on the US CPI numbers released on Thursday and the data gathered thus far, the Fed will make its decision on interest rates on November 1, which will affect the US stock market and other connected assets.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content

Recommended Content

Editors’ Picks

MANTA suffers 4% pullback after unlocking tokens worth $40 million

MANTA suffers 4% pullback after unlocking tokens worth $40 million

Manta Network (MANTA) unlocked over 8% of its circulating supply on Thursday. The unlocked tokens were airdropped and distributed in public sale, according to data from Tokenunlocks. 

More Cryptocurrencies News

XRP struggles to recover as lingering Ripple lawsuit could reach Supreme Court, former SEC litigator says

XRP struggles to recover as lingering Ripple lawsuit could reach Supreme Court, former SEC litigator says

The SEC vs. Ripple potential showdown at the Supreme Court is likely, says former SEC litigator Ladan Stewart. XRP Ledger calls developers, businesses and investors to build on the blockchain, extending Apex 2024 registration until April 30. 

More Ripple News

Bitcoin Layer 2 Merlin chain TVL climbs 20%, defying broad market correction

Bitcoin Layer 2 Merlin chain TVL climbs 20%, defying broad market correction

Merlin chain’s TVL added 20% this week, and crossed $800 million on Thursday. Bitcoin Layer 2 assets noted double-digit losses in the past week. Stacks, Elastos, SatoshiVM, BVM are hit by a correction as Bitcoin hovers around $61,000. 

More Bitcoin News

If Bitcoin restarts bull run, these altcoins are likely to explode Premium

If Bitcoin restarts bull run, these altcoins are likely to explode

If Bitcoin’s consolidation ends and the bull run resumes, altcoins are likely going to trigger a massive rally. Last cycle’s hot tokens like SOL, AVAX, WIF, ONDO, etc., could see renewed enthusiasm. 

More Cryptocurrencies News

Bitcoin: BTC’s rangebound movement leaves traders confused

Bitcoin: BTC’s rangebound movement leaves traders confused

Bitcoin (BTC) price has been hovering around the $70,000 psychological level for a few weeks, resulting in a rangebound movement. This development could lead to a massive liquidation on either side before a directional move is established. 

Read full analysis