US Consumer Price Index (CPI) data, due tomorrow, May 15 (Wednesday), at 8:30 am ET, is expected to be a potentially significant catalyst for bitcoin price . This expectation particularly arises from bitcoin's recent tendency to respond to macroeconomic news, indicating greater sensitivity to such data to influence 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 after three consecutive months in which inflation data exceeded market expectations. Analysts are currently projecting a slight moderation in inflation rates for April, which could have consequences for monetary policy and financial markets.
CPI preview: what to expect
For April, economists expect the CPI to show a year-over-year increase of 3.4%, a slight slowdown from 3.5% in March. On a monthly basis, the increase is forecast to slow to 0.3% compared to 0.4% previously.
The core CPI, which excludes the more volatile costs of food and energy, is also expected to reflect a similar bearish trend. The forecast suggests a drop of 3.8% to 3.6% year-on-year, marking the lowest annual core inflation rate since April 2021. Similarly, the monthly increase in core CPI is expected to slow to 0 .3% compared to the previous month. 0.4%.
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Goldman Sachs Economists twitter.com/rymondIncKenya/status/1789928028564304284″ target=”_blank” rel=”nofollow”>anticipate The core CPI will continue to show disinflationary trends in the coming months, forecasting that monthly core CPI inflation will range between 0.25% and 0.30% before declining to around 0.2% by the end of 2024. 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 to reach 2.7% by December 2024.
CPI data typically plays an important 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 the CPI and PPI reports. Notably, today (at 8:30 a.m. ET) is a rare occasion where US PPI data is released the day before CPI data.
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“The IPP + CPI data have a very strong correlation. The IPP historically leads the CPI figures. Therefore, expect the market to react more significantly than usual to any failure to meet expectations,” renowned crypto analyst Ted (@tedtalksmacro) warned today.
<blockquote class="twitter-tweet” data-width=”500″ data-dnt=”true”>
Today is a rare occasion where the US PPI data is released the day before the CPI data.
PPI + CPI data have a very strong correlation. The IPP historically leads the CPI figures.
Therefore, the market is expected to react more significantly than usual to any failure to meet expectations. https://t.co/BVlHuBMI1x pic.twitter.com/BCCpZac6ZW
-ted (@tedtalksmacro) twitter.com/tedtalksmacro/status/1790243251821371670?ref_src=twsrc%5Etfw” rel=”nofollow”>May 14, 2024
How will bitcoin react?
The bitcoin and cryptocurrency markets have shown notable sensitivity to inflation figures and the policy of the United States Federal Reserve in recent months. Ted highlighted the importance of upcoming inflation data, indicating that a slowdown in inflation could boost risk assets like bitcoin.
He twitter.com/tedtalksmacro/status/1789954543989727480″ target=”_blank” rel=”nofollow”>fixed
Inflation data is the focus. (…) Expect volatility, however, this is the first time in a long time where we are likely to see sluggish inflation data. That will be good for risk assets like bitcoin, if true, and we could be on the verge of a rally there.
This feeling is twitter.com/krugermacro/status/1790229624578101257″ target=”_blank” rel=”nofollow”>echoed by Alex Krüger (@krugermacro), who succinctly captured the market sentiment: “Inline or soft CPI: higher, Hot CPI: lower, btc is back to trading macro news.” This outlook 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 the time of publication, btc was trading at $61,628.
Featured image created with DALL·E, chart from TradingView.com
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