The crypto market is holding its breath ahead of Friday’s release of the U.S. Consumer Price Index (CPI) report, a key inflation gauge that could dictate the Federal Reserve’s next policy move. Despite the ongoing government shutdown, the Bureau of Labor Statistics (BLS) has confirmed the data will be published as scheduled.

Economists expect headline CPI to climb 0.4% month-over-month, mirroring August’s increase, while annual inflation is projected to rise slightly to 3.1% from 2.9%. Core CPI — which strips out volatile food and energy prices — is forecast to advance 0.3% monthly, keeping its annual rate steady at 3.1%.

Major Wall Street banks — including Goldman Sachs, Barclays, JPMorgan, and Deutsche Bank — are predicting similar outcomes, with several analysts warning that inflation could surprise to the upside. A stronger-than-expected CPI reading could push the Federal Open Market Committee (FOMC) to adopt a more cautious stance, potentially delaying any interest rate cuts and triggering renewed risk-off sentiment across markets.

In crypto, traders are positioning for turbulence. 10x Research reports that Bitcoin and Ethereum option skews have turned notably bearish, reflecting growing market anxiety. Bitcoin’s implied volatility remains elevated, while Ethereum options are trading at discounts — leading some investors to hedge by shorting $BTC C and taking long positions on $ETH

through call options.

On-chain metrics also show growing pressure among short-term holders. Data from Glassnode indicates that capitulation signals are beginning to flash, with Analyst Ali Martinez warning that if Bitcoin slips below its short-term holder realized price, it could revisit the long-term holder threshold near $37,000.

With CPI data just hours away, market participants are watching closely. A hot inflation print could spark sharp moves across both traditional and digital assets — and potentially set the tone for the rest of the month.

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