Bitcoin needs ‘3.3% or lower’ CPI print to reach new ATH
Bitcoin’s price could hit a new all-time high if the U.S. Consumer Price Index (CPI) for May reports at 3.3% or lower, according to Markus Thielen from 10x Research. Thielen explains that Bitcoin’s value has been significantly influenced by inflation data. Historical trends show that higher-than-expected CPI results typically lead to price declines. For instance, in April 2024, Bitcoin’s price fell sharply following a CPI of 3.5%, which was above market expectations.
Thielen underscores that Bitcoin’s recent price movements have mirrored inflation trends, especially as the cryptocurrency is seen as a hedge against inflation. If inflation is perceived to be under control, it could bolster investor confidence and drive up Bitcoin’s price. Conversely, unexpected inflation spikes could deter investors, fearing economic instability and potential interest rate hikes from the Federal Reserve.
Currently, the market exhibits a bullish sentiment towards Bitcoin, partly due to substantial inflows into Bitcoin Exchange-Traded Funds (ETFs). These inflows are indicative of strong investor interest and confidence in the cryptocurrency’s future performance. However, Thielen cautions that the momentum could be threatened if the CPI surpasses expectations, potentially triggering a sell-off.
The broader macroeconomic environment is also crucial. The Federal Reserve’s monetary policy, particularly its stance on interest rates, plays a vital role. A lower-than-expected CPI could signal to the Fed that inflation is cooling, possibly leading to a pause in rate hikes, which would be favorable for Bitcoin. Conversely, persistently high inflation could compel the Fed to maintain or even increase rates, negatively impacting Bitcoin.
