Van Straten Anticipates Bitcoin Turbulence Today with U.S. Inflation Data Set to Increase.

Bitcoin Markets Await CPI Report as Inflation Rebound Could Spark Volatility

The cryptocurrency market is bracing for potential turbulence as the U.S. Consumer Price Index (CPI) report, due Wednesday, is expected to show an uptick in inflation, marking the end of a six-month consecutive decline.

Crypto Momentum Faces Key Test

Bitcoin (BTC) recently surged to an all-time high of $90,000 following a dramatic post-election rally that added over $800 billion to the total crypto market capitalization. However, after this sharp rise, the cryptocurrency has entered a period of consolidation, with traders awaiting fresh cues from economic data.

The CPI report could provide that spark, as analysts predict a year-on-year inflation rate of 2.6% for October, up from September’s 2.4%, according to FXStreet. If confirmed, this would mark the first increase since March and signal persistent price pressures in the economy.

Core Inflation Remains Sticky

While headline inflation garners attention, core inflation—excluding volatile food and energy prices—remains a key focus. Core inflation ticked up to 3.3% in September, adding to concerns about the Federal Reserve’s ability to keep inflation in check.

This backdrop has pushed U.S. Treasury yields higher, with the 10-year yield reaching 4.4%, up significantly since the Fed initiated its rate-cutting cycle in September. Rising yields could weigh on risk assets like bitcoin by bolstering the U.S. dollar, which has historically shown an inverse correlation with BTC.

Implied Volatility Hints at Major Moves

Options markets are flashing warning signs of potential volatility. Implied volatility for BTC options expiring in a week has jumped from 40% to 90%, reflecting heightened uncertainty. Such spikes often precede significant price swings, suggesting traders are preparing for sharp moves in either direction.

Bitcoin’s Reaction to CPI Reports

This year, bitcoin’s reaction to inflation data has been mixed. In January, a hotter-than-expected inflation reading drove BTC prices down 7.5%. However, as inflation cooled in mid-2024, CPI releases became bullish catalysts, with BTC rallying 6.7% on Jul. 15 after a favorable report.

Now, with inflation expected to rebound, bitcoin traders face a critical question: will the cryptocurrency continue its upward march, or will the renewed inflationary pressures lead to a retracement?

Market Sentiment on Edge

“Bitcoin is at a pivotal point,” said Alex Morrow, a strategist at CryptoFlow Capital. “The CPI data could either validate the current rally or force a rethink of bullish narratives, especially if the report reignites fears of prolonged monetary tightening.”

As the report looms, traders are closely watching bitcoin’s next move, with the $90,000 level acting as a key psychological barrier. A break above could set the stage for new highs, while a rejection might lead to a deeper pullback.

All eyes are on the inflation report as markets prepare for what could be a decisive moment for bitcoin’s trajectory.