Bitcoin price is experiencing a slight increase in anticipation of the upcoming US CPI Data. The options market for Bitcoin appears to be unaffected by the impending CPI report.
Bitcoin has made its way up to the $62,000 mark as investors eagerly await important macroeconomic data. The release of the US Consumer Price Index (CPI) and Federal Reserve Chairman Jerome Powell’s remarks on the economy are highly anticipated this week.
According to reports from Crypto News Flash, the Consumer Price Index (CPI) inflation, set to be released at 12:30 UTC on Wednesday, is expected to decrease to 3.4% year-over-year from the previous 3.5%. The Core CPI, which excludes volatile food and energy prices, is also predicted to slightly ease from 3.8% to 3.6%.
It is worth noting that Fed Vice Chair Philip Jefferson supports keeping interest rates at their current levels until there are clearer signs of declining inflation, with a focus on returning it to the target rate of 2%.
However, some economists surveyed recently believe that the Federal Reserve may need to reduce interest rates soon in order to stimulate the economy or prevent any negative impacts from excessive inflation. Specifically, some anticipate a 25 basis point interest rate cut in September, while a larger number of economists expect an additional 50 basis points cut in 2024.
The expectation of interest rate cuts and moderate inflation could have a positive effect on Bitcoin’s price. When potential economic threats are reduced, investor confidence tends to increase, leading them to seek alternative assets like cryptocurrency. This could potentially drive up the price of Bitcoin.
Surprisingly, the options market for Bitcoin does not seem to be affected by the upcoming CPI report. Option prices typically rise when a major event is on the horizon to reflect increased uncertainty. However, in this case, Bitcoin option prices suggest only a small increase in volatility after the CPI release. This indicates that traders do not anticipate any major surprises in the inflation numbers. In contrast, the S&P 500 options market is showing higher implied volatility, suggesting that investors expect more price movement for stocks after the CPI report.
While a softer inflation data could increase the likelihood of a rate cut later this year, it is important to remember that the Fed takes into account various factors beyond just inflation when making monetary policy decisions.
The Fed is likely to take a wait-and-see approach in the coming months, closely monitoring data before making any decisions on interest rates. If domestic demand and inflation readings continue to decline throughout the year, a rate cut by December is a possibility.
Currently, Bitcoin is trading at $62,017, with a 0.27% increase in the past day. The market capitalization is $1.2 trillion, and the trading volume is $24 million.
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