- BTC surges ahead of the anticipated release of positive U.S. CPI data on Jan. 12.
- Analysts have however called for caution among traders as the bear market may not be over.
Bitcoin (BTC) has surged ahead of the release of the U.S.’s December Consumer Price Index (CPI) data. The pioneer digital currency is currently trading at around $18,180, up 4.21 percent in the last 24 hours.
The surge comes as experts have predicted that the inflation data could give credence to claims that inflation is fading. Reuters reports that December’s CPI data is expected to come in at around 5.7 percent when it is released today Jan. 12. The figure will be a slow down from the 6 percent recorded in November, while it will bring month-on-month headline inflation to zero.
This data is seen as a significant marker for investors attempting to predict future market direction. For one it raises hope that the U.S. Federal Reserve Bank will continue to slow down interest rate hikes.
“…it’s inevitable that today’s U.S. CPI has the ability to shape the next month. The latest releases have seen two downside surprises on CPI in a row for the first time since the pandemic, which has led to growing hopes that the Fed might achieve a soft landing after all,” wrote Deutsche Bank strategist Jim Reid.
Previous CPI and interest rate hike announcements have had remarkable effects on the BTC market. Most telling was the September hike which was followed by a 10 percent drop in the price of BTC.
In a tweet, pseudonymous crypto analyst Cantering Clark pointed out that there is already an interesting relationship between BTC and CPI at present. The market has traded up in anticipation of the CPI announcement. It could follow that it will sell off following the announcement. This is one of several patterns the analyst notes.
The market is up into CPI, but flat/red today. There is an interesting pattern for BTC that may or may not be useful here.
Up day prior, sell off on CPI.
Down down prior, up on CPI.
Mostly flat but red prior, down on CPI
Mostly flat but up prior, up on CPI. pic.twitter.com/WOx0FQ2uRV
— Clark (@CanteringClark) January 11, 2023
Will BTC continue to recover in 2023?
However, some crypto analysts still have reservations about what to expect from the CPI data. Market pundit ‘CryptoGodJohn’ cautioned that market participants should be careful with the “bull posting.” While conceding that the inflation could fuel BTC to around $19-$20k, he noted that if expectations are wrong, traders could incur huge losses.
“I see an extreme amount of bull posting as $BTC sits under higher time frame resistance at $17,600 and CPI in two days. I hope y’all right cause if not a lot of y’all going to get rinsed hard,” he wrote in a tweet.
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Similarly, market experts are not confident that the Fed has been able to sustainably reign in the runaway inflation that started in 2022. Michael Burry, the famous Big Shot investor, wrote that the current inflation peak is not the last of this cycle.
He further notes that CPI is likely to go lower till the U.S. enters a recession. When this happens the Fed will cut rate hikes and the government will stimulate the economy leading to yet another inflation.
