CPI Preview: Bitcoin Price Poised To Surge If Projections Hold True
May 14 2024 - 7:00AM
NEWSBTC
The US Consumer Price Index (CPI) data, set to be released
tomorrow, May 15 (Wednesday), at 8:30 am ET, is anticipated to be a
potentially significant catalyst for the Bitcoin price. This
expectation stems particularly from Bitcoin’s recent trend of
responding to macroeconomic news, indicating a heightened
sensitivity to such data in influencing its market dynamics. The
CPI measures inflation by tracking changes in the price levels of a
market basket of consumer goods and services. The upcoming report
is of particular interest following three consecutive months where
inflation data exceeded market expectations. Analysts currently
project a slight moderation in inflation rates for April, which
could have consequential implications for monetary policy and
financial markets. CPI Preview: What To Expect For April,
economists expect the CPI to show a year-on-year increase of 3.4%,
a slight deceleration from March’s 3.5%. On a month-to-month basis,
the increase is anticipated to slow to 0.3% compared to 0.4%
previously. The core CPI, which strips out the more volatile costs
of food and energy, is also expected to reflect a similar
downtrend. The forecast suggests a drop from 3.8% to 3.6% on a
year-on-year basis, marking the lowest annual core inflation rate
since April 2021. Similarly, the monthly increase in core CPI is
expected to decelerate to 0.3% from the previous month’s 0.4%.
Related Reading: Bitcoin Will Be Set For New ATHs If It Breaks This
Resistance: Analyst Goldman Sachs economists anticipate that the
core CPI will continue to show disinflationary trends in the coming
months, forecasting monthly core CPI inflation to hover between
0.25% and 0.30% before decreasing to about 0.2% by the end of 2024.
The year-over-year core CPI is projected to stabilize at 3.5%, and
core Personal Consumption Expenditures (PCE) inflation, another key
indicator watched by the Federal Reserve, is expected at 2.7% by
December 2024. The CPI data typically plays a significant role in
influencing market dynamics, more so than the Producer Price Index
(PPI). However, the real implications for financial markets will
likely emerge once analysts review both the CPI and PPI reports.
Notably, today (at 8:30 am ET) is a rare occasion where US PPI data
is released the day prior to CPI data. Related Reading: Is The
Bitcoin Bottom In? Analyst Reveals Key Price Levels To Watch “PPI +
CPI data have a very strong correlation. PPI leading the way for
CPI numbers historically. Thus expect the market to react more
significantly than usual on any miss on expectations,” renowned
crypto analyst Ted (@tedtalksmacro) warned today. Today is a rare
occasion where US PPI data is released the day prior to CPI data.
PPI + CPI data have a very strong correlation. PPI leading the way
for CPI numbers historically. Thus expect the market to react more
significantly than usual on any miss on expectations.
https://t.co/BVlHuBMI1x pic.twitter.com/BCCpZac6ZW — ted
(@tedtalksmacro) May 14, 2024 How Will Bitcoin React? The Bitcoin
and crypto markets have shown notable sensitivity to inflation
figures and the US Federal Reserve policy over the past months. Ted
highlighted the importance of the upcoming inflation data,
indicating that a slowdown in inflation could bolster risk assets
like Bitcoin. He stated via X: Inflation data is centre-stage.[…]
Expect volatility, however, this is the first time in a little
while where we are likely to see inflation data slow. That’ll be
good for risk assets like Bitcoin if true and we could be on the
verge of leg higher there. This sentiment is echoed by Alex Krüger
(@krugermacro), who succinctly captured the market’s sentiment:
“CPI in line or soft: higher, CPI hot: lower, BTC is back to
trading macro news.” This perspective underscores the prevailing
market theory that softer inflation could lead to more
accommodative monetary policies, which are typically favorable for
risk assets like Bitcoin. At press time, BTC traded at $61,628.
Featured image created with DALL·E, chart from TradingView.com
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