Bitcoin’s decline reflects market caution ahead of pivotal CPI data release.
Bitcoin’s (BTC) price has shown volatility ahead of tomorrow’s US Consumer Price Index (CPI) report. According to CoinGecko’s data, after surging past $72,000 earlier this week, Bitcoin retraced below $68,500 on Tuesday. BTC is trading at around $68,800 at press time, down 4% in the last 24 hours.
The CPI report, due Wednesday, is expected to considerably impact the Federal Reserve’s policy, especially regarding interest rates. Last month’s CPI inflation was reported at 3.2%, with core CPI at 3.8%. Projections for the upcoming data estimate a CPI of 3.5% and a core CPI of 3.7%.
Estimates from the CME FedWatch Tool suggest a 97.3% likelihood that the Fed will hold interest rates between 525-550 basis points at the next FOMC meeting in May, with only a 2.7% chance of a rate decrease.
Despite the present uncertainty, the market is factoring in a high probability of rate cuts starting from July.
July Target Rate
December Target Rate
Economists polled by Reuters expect the headline CPI to rise by 3.4% year-over-year, representing a slight inflation reduction, moving closer to the Fed’s target.
Last week, Fed Chairman Jerome Powell stressed that the Fed would need more evidence that inflation is decreasing before cutting interest rates. Other Fed officials also showed a preference for a more cautious and stringent approach to easing monetary policy.
Bitcoin’s faltering momentum is rattling the crypto market, sending most altcoins into correction mode. Ethereum (ETH), after surging 8% on Monday, has shed those gains and is now down 4.5% over the last 24 hours, according to CoinGecko data.
However, not all coins are following suit. The Open Network (TON) and Fantom (FTM) defied the trend, each surging 8% today.