BTC enthusiasts and market speculators are closely following the latest Consumer Price Index (CPI) data, released on May 10, to predict how the BTC price action will respond. The CPI data is of significant importance since it serves as a catalyst for volatility in risk assets and is one of the key indicators the Federal Reserve considers when adjusting interest rates.
As the next interest rate shift is a month away, both private-sector and government metrics anticipate a decline in inflation for the coming months. Financial commentator Tedtalksmacro stated in a recent YouTube analysis that while there might be a slight stagnation now, the next two to three months could bring about a significant drop in inflation. He referred to the Cleveland Fed inflation forecast and “Trueflation,” an unofficial leading indicator for inflation trends that also indicates substantial declines ahead.
A tweet by Tedtalksmacro on the same day outlined various possible alterations in BTC price concerning different CPI numbers, using probabilities provided by JPMorgan Chase. For instance, a CPI figure above 5.5% might result in a $25,000 BTC price, although considered to have only a 4% probability.
The FedWatch Tool from the CME Group revealed that market expectations of the Fed halting its interest rate hikes to manage inflation in June stood at 80% at the time of writing. However, a review of short-term BTC price movement reveals that the lasting effect of the Binance FUD incident earlier this week has made it difficult for Bitcoin bulls to regain levels closer to $30,000.
Market analysis from monitoring resource Skew depicted the market as “overly saturated with shorts,” with market makers still selling into minor price increases. Binance’s spot market appeared to be the selling aggressor for the day.
Material Indicators, another monitoring resource, observed an increase in bid liquidity slightly below the $26,000 level on the Binance BTC/USD order book overnight. As they expect liquidity to shift around the order book, the vital question is whether buy and sell walls will insulate local support and resistance, or if some of the current liquidity will clear out and make way for volatility.
As the market awaits the upcoming economic reports, Bitcoin enthusiasts and market speculators will keep a close eye on the interaction between CPI data and BTC price action. The focus remains on how the inflation trend and associated federal policies influence market dynamics in the coming months.
Source: Cointelegraph
