Crypto and stock market investors awaited the consumer price index (CPI) inflation data for January by the U.S. Bureau of Labor Statistics for further cues on Fed rate cuts. Bitcoin price fell below $50,000 despite a massive buying in spot Bitcoin ETFs that triggered a substantial crypto market rally. BTC price can still hit $55K after hotter CPI inflation data.
With spot Bitcoin ETF recording $494 million net inflow on Monday, experts such as MicroStrategy’s executive chairman Michael Saylor believe a high demand will push BTC price higher in a few weeks.
Also Read: Bitcoin Slips As US CPI Comes At 3.1%, Fed Swaps Rate Cuts to July
CPI and Core CPI Expectations by Wall Street Giants
Wall Street giants expect a major fall in both CPI and core CPI inflation, especially after the recent CPI revision. While Fed officials are cautious on rate cuts in March, the upcoming economic data will guide better on the monetary policy outlook.
JPMorgan, Bank of America, UBS, Morgan Stanley, Citigroup, Deutsche Bank, Nomura, and RBC estimate headline CPI inflation cooling to 2.9% from 3.4%. However, Barclays, Goldman Sachs, TD Securities, and Wells Fargo anticipate a decline to 3%.
Whereas for core CPI, experts from banks including Citigroup, Deutsche Bank, JPMorgan, Morgan Stanley, and UBS estimate a drop to 3.7% from 3.9%. Moreover, Bank of America, Barclays, TD Securities and Nomura anticipate 3.8%, and Goldman Sachs expects a higher annual core rate of 3.9%.
Thus, the market estimated annual inflation rate cooling to 2.9% in January, which would be the lowest reading since March 2021. Also, annual core inflation is expected to slow to 3.7%, the lowest reading since April 2021. The estimates for monthly rates for both CPI and core CPI remain steady at 0.2% and 0.3%.
Bitcoin Price to $55,000?
The cooling CPI inflation will give the U.S. Federal Reserve proof to consider rate cuts in the months ahead. The CME FedWatch Tool shows an almost 50% probability of 25 bps rate cuts in June after the CPI release, with no probability of rate cuts in March.
Macro data shows volatility these days, making it crucial for traders to keep a watch. The US dollar index (DXY) is falling from 104.25 to 104. A drop below 104 is what crypto traders expect for further upside move in BTC price to $55,000.
Moreover, the 10-year treasury yield (US10Y) is falling but remains above 4%. The recent treasury bills’ auctions and Fed officials’ cautious outlook on rate cuts.
The derivatives market looks strong as futures and options traders made fresh bets to further upside in BTC price. Bitcoin futures open interest rises over 7% to $47.32 billion, with futures volume rising 70% in the last 24 hours.
Total options open interest jump 4% to $24.29 billion after a massive 7.20% rise in CME BTC Futures open interest and massive inflow in spot Bitcoin ETFs.
Options traders making higher bets for $56K, $60K, and even $70K for February. It indicates BTC price likely staying above $50,000 after the CPI release.
BTC price jumped 4% in the past 24 hours, with the price currently trading at $50,100. The 24-hour low and high are $47,745 and $50,358, respectively. Furthermore, the trading volume shoots to almost 100% in the last 24 hours, indicating a rise in interest among traders.
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