Bitcoin Holds $80K as Markets Await Key US Inflation Data
After settling near $80,000 over the weekend, Bitcoin has a crucial week ahead. But how long it stays at this level might be affected by a slew of major US economic events. In the previous week leading up to the pivotal FOMC meeting on September 15-16, risk-on assets have been riding high on the back of last Friday’s solid US jobs report and the extraordinary increase in expectations for an impending Fed rate hike. Whether Bitcoin continues its recovery path or has another major drop will likely be determined in the coming days by inflation statistics. Since the US financial markets will be closed on Monday in commemoration of Labour Day, it is expected that Monday will be rather calm. On Wednesday, there will be the 10-Year US Note Auction, but it is not anticipated to have much of an impact on the bitcoin market. Tuesday does not have any major events scheduled.
Thursday will mark the release of the August Producer Price Index statistics, which evaluates inflation from the point of view of producers; this will be the first major assessment. The headline PPI did not rise in July, although economists are projecting a 0.4% increase from the previous month. It is expected that the core PPI would be 0.3%. There will be an increase from 4.7% to 5.4% yearly inflation in producer prices. Inflationary pressures are seen to be growing, especially with oil prices remaining elevated due to the ongoing turmoil in the Middle East. A hotter result could confirm these concerns. For risk-on alternatives like cryptocurrencies, Friday will be a pivotal day for the whole financial markets.
Expectations for core CPI to fall from July’s 2.5% and for inflation to remain around 3.3% to 3.4% per year, according to forecasts that will be announced with the CPI report. Expectations of future Fed rate hikes could be significantly and quickly impacted by the actual results. The case for another rate hike would be strengthened by a higher-than-expected CPI reading, which might lead to a decline in Bitcoin prices and an increase in Treasury yields, or vice versa. Upcoming inflation statistics will play a crucial role in determining the central bank’s next move, considering the hawkish stance expressed by Fed Chair Kevin Warsh at the end of August and the strong US jobs report that was released last Friday.
Since that relocation is scheduled on September 16, the data from this week is of the utmost importance. Instantly in reaction to Warsh’s hawkish comments and the jobs news, Bitcoin plummeted, falling $2,000 to $3,000 in 24 hours. However, a higher CPI figure before the FOMC meeting would not strengthen its bullish case, especially when the probability of a rate hike are more than 50%. Despite this, it has managed to stabilise at approximately $80,000.
