BTC may see the prices of the price from the soft release of the US CPI, but the main risk-on surge will appear unlikely
A soft US inflation report later Wednesday is likely to work well for risk assets, including Bitcoin (BTC). But the hopes of fireworks can fail.
The Labor Department will publish a Consumer Consumer (CPI) Consumer Report of January on Wednesday at 13:30 UTC. Expected to show that the cost of living increased by 0.3% month-to-month in January, slowing down from the rise of 0.4% of December, according to Reuters estimates monitored by Fxstreet. The annual figure is expected to match 2.9% December reading.
The main inflation, which releases volatile food and energy components, is expected to rise to 0.3%month-to-month from 0.2%, resulting in an annual reading of 3.1%, down from to 3.2%of December.
The lower data expected, especially the main figure, is likely to bolster expectations for further deductions in the Federal Reserve (FED) interest rate, which could lead to lower treasury yields and a Poor dollar index, which ultimately boosts demand for riskier assets. According to the CME’s Fedwatch tool, the market is currently estimating a 54% chance that the Fed can cut interest rates once or not for all this year.
While a potential adjustment to the Fed rate cuts can be raised by the BTC, not likely to be a single catalyst for a breakout from the ongoing integration -including between $ 90,000 and $ 110,000.
This is due to forward market measurements indicating higher inflation in the coming months amid fears of trade war, suggesting that the Fed can have a limited window To implement aggressive rates in the rate.
The data monitored by MOTT Capital Management It is shown that the two -year swap of inflation has risen to about 2.8%, the highest since early 2023. The five -year replacement shows a similar trend. Higher inflation swap indicates that the market expects inflation rates to rise in the future, motivating investors to pay a higher premium to protect themselves against the potential loss of electricity by entering the replacement contracts tied to the CPI.
In other words, the ongoing uprising on these metrics indicates that developing inflation towards the 2% Fed target is stuck, and price pressure will likely increase in the coming years , probably because of Trump’s tariffs.
Plus, some investment banks believe that a soft January reading of the CPI will not see the Fed away from the Hawkish rate guide. In his testimony to Congress on Tuesday, Chairman Jerome Powell said the central bank had not rushed to scan the rates.
“We do not expect inflation development is sufficient to promote additional interest rate cuts from this year’s Fed,” RBC’s weekly note said, adding that January’s January report will show limited Avoid price pressure.
Blackrock said the ongoing inflation of services will prevent the fed from cutting rates.
“We get CPI for January this week. Although the December’s CPI report showed signs of inflation, wage growth remains above the level that will allow inflation to return to 2% of the Federal Reserve target, in our view.
Finally, BTC may approach the lower end of the $ 90k- $ 110k trading range should be warmer CPI printing than expected.
