Bitcoin fell more than 2% on Wednesday as investors remained on the sidelines ahead of the later release of US CPI data.
Conclusion
- Before the release of the US CPI data, the price of Bitcoin fell more than 2%.
- The monthly CPI reading is expected to be 0.3% warmer in February, with the reading expected to remain flat for the year.
According to crypto.news, Bitcoin (BTC) fell to $69,936 from a one-day high of $71,612 on Tuesday.
Bitcoin price action fell as traders prepared for the release of the Consumer Price Index (CPI) from the US Bureau of Labor Statistics due at 8:30 am ET.
Economists expect a monthly reading of 0.3% in February, compared with a 0.2% increase in January, and the annual reading to remain flat at 2.4%. Meanwhile, core CPI numbers are estimated to come in at 0.2% per month and 2.5% per year.
While inflation data has often been critical for Federal Reserve officials in determining the next policy step, Bitcoin’s initial reaction after the announcement is likely to remain muted, as the February CPI print does not affect the impact of crude oil prices on inflation.
Following Iran’s aggressive attack on merchant ships passing through the Strait of Hormuz, a strategically important waterway, global energy supplies were severely disrupted and crude oil prices rose above $100 for the first time in years as the market reacted to the sudden threat to one of the world’s most important transit points.
Without including rising oil prices in inflation, which can be expected after next month’s CPI, the price of Bitcoin may trade in a relatively sideways manner and have no clear direction after the release of today’s data.
If the CPI print instead turns out to be warmer than expected, it could trigger bearish sentiment, while a cooler reading could put the bulls in control.
At press time, markets see the possibility of a rate cut in March and at least 25 bps in April, according to the CME FedWatch tool.
Cryptocurrencies, including Bitcoin, typically rise when the likelihood of a Fed rate cut increases and retreat when they decrease.
Currently, $71,000-$72,000 seems to be the next resistance zone for Bitcoin, which the bulls have struggled to enter. On the other hand, a break below the $66,000-$67,000 support zone could open the door for a deeper correction.
Disclosure: This article does not provide investment advice. The content and materials on this page are for educational purposes only.
