Bitcoin’s recent price performance suggests weak risk appetite ahead of critical Consumer Price Index (CPI) data—the first clear inflation signal in weeks. According to Decrypt, this report will directly influence market expectations for a potential Federal Reserve rate cut in December. A cooler-than-expected inflation print could revive risk appetite and support asset prices, while a hotter reading may prolong declines.
Bitcoin traders are once again awaiting key inflation figures that could sway the Federal Reserve toward either a hawkish or dovish stance as it seeks to manage rising costs. Investors currently find themselves caught between optimism over a possible resolution to the U.S. government shutdown and caution stemming from a pullback in risk appetite.
Thursday’s inflation report is expected to set the tone for the market’s next major move. Sentiment had improved last week after the October 10 crash—which resulted in a $19 billion liquidation wipeout—thanks to easing geopolitical tensions and firmer technical indicators. However, that optimism has been overshadowed by the pending U.S. October CPI report, the second inflation print since the government shutdown began 43 days ago.
Consensus estimates compiled by FXStreet anticipate October’s year-over-year inflation to hold steady at 3%. Tim Sun, Senior Researcher at HashKey Group, told Decrypt there is still some uncertainty regarding whether the CPI data will be released on schedule. He explained that the October figure, together with any delayed September data, “will directly determine how traders price in a potential rate cut in December and will serve as the benchmark for short-term market positioning.”
Market data from the FedWatch tool shows that the odds of a rate cut in December have fallen to 67.9%, down from 85% last week. This shift reflects Federal Reserve Chairman Jerome Powell’s recent hawkish rhetoric. Should the inflation print come in cooler than expected, it could encourage bets on a more dovish Fed, weakening the U.S. dollar and potentially boosting risk assets like Bitcoin. Conversely, a hotter-than-expected report might strengthen the dollar and deepen Bitcoin’s losses.
Over the past 24 hours, Bitcoin has dropped 2.7% to $10,360, erasing gains made during Sunday trading, according to CoinGecko data. Tim Sun attributed yesterday’s decline to a broad-based reduction in overall risk appetite. He highlighted a rotation of capital out of tech stocks and into stable blue-chip assets as a clear sign of investor caution amid ongoing macroeconomic and geopolitical uncertainty.
“The market is still constrained by weak sentiment,” Sun said. “Any clear indication of a rate-cut trajectory or expectations of liquidity easing could restore some level of risk appetite.” The HashKey analyst added that such a development would provide “direct support for a price rebound across risk assets.”
As investors await the inflation data, the outcome remains pivotal in shaping Bitcoin’s near-term trajectory and the broader risk asset landscape.
https://decrypt.co/348263/bitcoin-traders-upcoming-us-inflation-print