CPI Preview: Bitcoin Price Poised To Surge If Projections Hold True

Jake Simmons

Last Updated: June 11, 2024 7:00 am

3 mins read

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The US Consumer Price Index (CPI) data, set to be released tomorrow, May 15 (Wednesday), at 8:30 am ET, is anticipated to be a potentially significant catalyst for the Bitcoin price. This expectation stems particularly from Bitcoin’s recent trend of responding to macroeconomic news, indicating a heightened sensitivity to such data in influencing 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 following three consecutive months where inflation data exceeded market expectations. Analysts currently project a slight moderation in inflation rates for April, which could have consequential implications for monetary policy and financial markets.

CPI Preview: What To Expect

For April, economists expect the CPI to show a year-on-year increase of 3.4%, a slight deceleration from March’s 3.5%. On a month-to-month basis, the increase is anticipated to slow to 0.3% compared to 0.4% previously.

The core CPI, which strips out the more volatile costs of food and energy, is also expected to reflect a similar downtrend. The forecast suggests a drop from 3.8% to 3.6% on a year-on-year basis, marking the lowest annual core inflation rate since April 2021. Similarly, the monthly increase in core CPI is expected to decelerate to 0.3% from the previous month’s 0.4%.

Goldman Sachs economists anticipate that the core CPI will continue to show disinflationary trends in the coming months, forecasting monthly core CPI inflation to hover between 0.25% and 0.30% before decreasing to about 0.2% by the end of 2024. The 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 at 2.7% by December 2024.

The CPI data typically plays a significant 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 both the CPI and PPI reports. Notably, today (at 8:30 am ET) is a rare occasion where US PPI data is released the day prior to CPI data.

“PPI + CPI data have a very strong correlation. PPI leading the way for CPI numbers historically. Thus expect the market to react more significantly than usual on any miss on expectations,” renowned crypto analyst Ted (@tedtalksmacro) warned today.

Today is a rare occasion where US PPI data is released the day prior to CPI data.

PPI + CPI data have a very strong correlation. PPI leading the way for CPI numbers historically.

Thus expect the market to react more significantly than usual on any miss on expectations. https://t.co/BVlHuBMI1x pic.twitter.com/BCCpZac6ZW

— ted (@tedtalksmacro) May 14, 2024

How Will Bitcoin React?

The Bitcoin and crypto markets have shown notable sensitivity to inflation figures and the US Federal Reserve policy over the past months. Ted highlighted the importance of the upcoming inflation data, indicating that a slowdown in inflation could bolster risk assets like Bitcoin.

He stated via X:

Inflation data is centre-stage.[…] Expect volatility, however, this is the first time in a little while where we are likely to see inflation data slow. That’ll be good for risk assets like Bitcoin if true and we could be on the verge of leg higher there.

This sentiment is echoed by Alex Krüger (@krugermacro), who succinctly captured the market’s sentiment: “CPI in line or soft: higher, CPI hot: lower, BTC is back to trading macro news.” This perspective 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 press time, BTC traded at $61,628.

Bitcoin price — BTC price falls below $62,000 again, 1-day chart | Source: BTCUSD on TradingView.com

Featured image created with DALL·E, chart from TradingView.com

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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