Bitcoin Price Threatened By Inflation, CPI Print To Shed More Light

The Bitcoin price hovers between $18,800 to $19,500 and is cutting out both short- and long-term positions. As it nears a major economic event, the current market dynamics have been dictated by macro forces.

One of these events is the Consumer Price Index for September (CPI). The spikes in volatility have followed these reports from the U.S. Federal Reserve for benchmark inflation over the last months.

Bitcoin’s price currently trades at $19,000. There have been some sideways movements in Bitcoin over the past 24 hours, and an average 6% decline in Bitcoin prices in the past week. BTC’s price action has been dragging the crypto market down with it as market participants for digital and traditional assets brace for volatility.

Bitcoin price BTC BTCUSDT
BTC’s price compressing as volatility declines on the daily chart. Source: Tradeview BTCUSDT

The Bitcoin Price squeeze Incoming It Will Decisive to Print CPI

Caleb Franzen is a senior market analyst for Cubic Analytics. sharedHis thoughts about the CPI report. The Producer Price Index is one of the country’s most significant inflation benchmarks, and it was published by the U.S. government today.

Franzen stated that the PPI is increasing, going from 6.5% in august to 6.8% September. This beats expectations, and suggests higher inflation, which will be reflected in the CPI print. The PPI is far from its yearly low at 9.2%, but as the analyst said, the upside trend reflects the “stickiness” in inflation and might signal the U.S. Fed to adopt a more aggressive monetary policy.

In that sense and taking a deeper look into the factors contributing to high inflation, Franzen notes a “tug-of-war” between inflationary and deflationary forces. In general, the decline in energy prices as well as the fall in the price oil and other fossil fuels might help to reduce inflation.

However, this situation is still uncertain and will influence the Fed’s final decision. This could negatively impact Bitcoin prices as well legacy assets. The analyst suggested that the CPI for next year might be reflective of this uncertainty.

I expect to see month-over-month CPI be relatively unchanged, almost certainly ±0.2%. On a YoY basis, I think +8.0% or greater is near certain; though I expect to see core CPI, median CPI, & trimmed-mean CPI accelerate relative to their August results.

Is High Inflation The New Normal?

It could result in a Bitcoin price rally that is short-term and dissipates the uncertainty currently present in this emerging asset class. The $20,000.500 level will be a strong resistance area and short-term headwind if this occurs.

Following the CPI Print the Federal Open Market Committee will bring volatility to the market. According to QCP Capital’s trading desk, this has led to Bitcoin’s positive performance.

The chart shows that the BTC/USD pair traded during the FOMC. There has been an immediate rally, followed by large crashes. These abrupt price actions become less effective as markets prices fall and inflation rises.

Are BTC’s current levels going to be broken? Will it see another rally that is short-lived?

Bitcoin price BTC BTCUSDT chart 2 QCP
Source: QCP Capital via Twitter

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