Bitcoin needs U.S. inflation rate to drop to 3.3% or lower to achieve a new all-time high (ATH), according to recent analyses.
Bitcoin’s price movements might seem erratic, but according to crypto analysts, the true driver is inflation. The leading cryptocurrency, currently priced at $68,104, needs a decrease in U.S. inflation to break its all-time high set in March. As the release of the next Consumer Price Index (CPI) results looms, analysts are closely watching.
A recent report by Markus Thielen, head researcher at 10x Research, highlights the significance of the upcoming CPI data. Thielen believes that if the CPI falls to 3.3% or lower, Bitcoin is poised to reach a new peak. This prediction comes ahead of the U.S. Bureau of Labor Statistics’ announcement scheduled for June 12.
Inflation’s Impact on Bitcoin’s Price
The importance of inflation data in Bitcoin’s price trajectory cannot be overstated. The previous CPI result was 3.4% on May 15, and Thielen argues that a 0.1 percentage point decrease could be pivotal. In the two weeks leading up to the May CPI results, Bitcoin ETF inflows have remained strong, indicating investor anticipation of favorable inflation numbers.
However, a higher-than-expected CPI result could dampen momentum. Historical data supports this; for instance, on April 10, the CPI was printed at 3.5%, slightly above expectations. Consequently, Bitcoin’s price saw a significant drop, falling 6.67% to $56,000 by April 30. This pattern underscores the sensitivity of Bitcoin’s price to inflation figures.
ETF Inflows and Market Sentiment
ETF inflows are a critical indicator of market sentiment and have shown positive trends recently. Farside data reveals that spot Bitcoin ETF inflows have been consistently positive since May 13, peaking at $305.7 million on May 21. These inflows suggest a strong market belief in Bitcoin’s potential to reach new highs, contingent on favorable CPI results.
Thielen’s analysis also points to the launch of spot Bitcoin ETFs on January 11, which initially saw significant inflows of $611 million. However, the rest of January’s inflows were lackluster, primarily due to higher-than-expected CPI results. The CPI for January came in at 3.4%, exceeding the expected 3.2% and the previous month’s 3.1%. This higher-than-anticipated inflation dampened Bitcoin’s performance in January, despite strong initial ETF inflows.
The Road Ahead for Bitcoin
As the market awaits the next CPI results, the anticipation is palpable. The data will not only influence Bitcoin’s short-term price movements but could also determine its ability to surpass its all-time high. The correlation between inflation and Bitcoin’s price is clear, making the upcoming CPI release a crucial event for investors.
Investors and analysts alike are keeping a close eye on these developments. A CPI print of 3.3% or lower could be the catalyst Bitcoin needs to reach new heights. Conversely, higher inflation figures could lead to another period of consolidation or decline.