Bittime – Ahead of the release of inflation data, an interesting correlation between the Consumer Price Index (CPI) and Bitcoin fluctuations is in the spotlight.
The reason is, that Bitcoin's fluctuating price movements continue to attract investors all over the world. The latest economic developments in the United States are also expected to determine the direction of Bitcoin's next movement.
Lower Inflation: The Key to New Highs?
Senior analyst at 10x Research, Markus Thielen, recently stated that Bitcoin could reach a new all-time high if inflation in the United States, as measured by the CPI, slows enough.
"If inflation is 3.3% or lower, Bitcoin is expected to reach new highs," said Thielen in his report published on May 29. Thielen was referring to the upcoming release of CPI results by the US Bureau of Labor Statistics (BLS) scheduled for June 12, 2024.
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May CPI Decreases Slightly
CPI for May was recorded at 3.4%, a slight decrease from the previous month. However, this figure is still too high to allow a significant increase in Bitcoin prices.
Thielen pointed out that, in the two weeks leading up to the May data release, inflows into Bitcoin exchange-traded funds (ETFs) remained strong due to anticipated lower inflation.
He also noted that if the CPI results exceed expectations, momentum could weaken, as was observed earlier this year.
Since May 13, inflows into the Bitcoin ETF have been positive every day, with the largest inflow on record on May 21, at $305.7 million.
Thielen believes that Bitcoin price movements are not random but are mainly influenced by critical factors such as inflation. He added that several events this year suggest that higher-than-expected CPI results have led to a decline in Bitcoin prices.
For example, on April 10, the CPI was recorded at 3.5%, just 0.1% higher than expected, and a few weeks later, the price of Bitcoin fell by 6.67% to $56,000.
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CPI Impact on Bitcoin
Markus Thielen explains that price movements are not random but are mainly influenced by critical factors such as inflation. “There are no 'random' movements in Bitcoin prices; "It all boils down to the main drivers, the most important of which is inflation," he stressed.
The launch of a Bitcoin exchange-traded fund (ETF) in January also shows how investors react to economic data.
While there was a massive inflow of $611 million on the first day, it tapered off when the CPI results were higher than expected. Thielen attributed this situation to higher-than-expected CPI results, which weakened Bitcoin in January and led to consolidation through March.
If June's CPI comes in below estimates, it could boost investor confidence and encourage a new wave of Bitcoin buying. Lower inflation could not only support Bitcoin but also increase the perception of the digital asset as a hedge against inflation.
Bitcoin Price Prediction and Correlation with US Inflation Data
Summer: Over
When this writing was written on June 3, 2024, the price of Bitcoin had increased by +1.92% so that Bitcoin finally reached $69,094.49. This is of course good news because previously Bitcoin was always at $68,000. In fact, on Thursday morning for Asian trading, Bitcoin was actually at $67,122.
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Correlation with CPI Data and Bitcoin ETF
While most altcoins saw bigger losses today, with the market retreating 1.3% to a total capitalization of $2.68 trillion. Analysts link Bitcoin price movements to US inflation data, specifically as measured by the CPI.
Inflows into Bitcoin ETFs are also observed closely following the release of CPI data. If data shows inflation is lower than the previous month, inflows into Bitcoin ETFs are likely to increase.
Bitcoin Future Predictions
Analysis from 10x Research predicts that inflows into Bitcoin ETFs will likely remain strong over the next two weeks leading up to the release of CPI data on June 12. This has the potential to push Bitcoin to new all-time highs.
Analysts expect minor weakness as consensus forecasts another disappointingly higher inflation data for May 15. However, looking ahead to the next two months, they expect inflation will probably be around the same level, "with a decline imminent."
The analysis shows that inflation is no longer a concern and will likely turn into a positive driver for Bitcoin as the summer progresses. For additional information, US inflation based on CPI data was 3.4% for April.
In addition to the CPI, the core personal consumption expenditures (PCE) price index data, which is also the Federal Reserve's preferred measure of inflation, was released on Friday, May 31.
How to Buy Bitcoin (BTC) on Bittime
You can buy and sell Bitcoin (BTC) easily and safely via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
Bitcoin (BTC) is available on Bittime with the market pair BTC/IDR. To be able to buy BTC IDR at Bittime, make sure you have registered and completed identity verification. Also, please ensure you have enough balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn the complete guide on how to buy Bitcoin (BTC) on Bittime.
Monitor the movement of Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and other crypto charts to find out today's crypto market trends in real-time on Bittime.
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DISCLAIMER: This article is informational and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for fluctuations in crypto asset exchange rates.
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