Arslan Butt•Sunday, February 9, 2025•2 min read
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Bitcoin traders brace for volatility as key US inflation data and Fed policy updates take center stage this week. The US Consumer Price Index (CPI) report, due this week, is expected to provide insight into inflation trends, potentially influencing interest rate expectations.
The latest US job data, which showed a slowdown in hiring, has already sparked speculation that the Fed may be closer to cutting rates.
Bitcoin spiked past $100,000 after weak job data fueled Fed rate-cut bets, but investors remain cautious ahead of CPI. However, crypto investors remain cautious as they monitor upcoming economic reports, including the Producer Price Index (PPI) and Federal Reserve Chair Jerome Powell’s testimony to Congress.
These events will offer further clarity on the Fed’s monetary policy outlook and its impact on risk assets like Bitcoin and Ethereum.
How US Inflation Trends Could Impact Bitcoin
Market analysts expect January’s CPI inflation to slow to 0.3%, down from 0.4% in December. Year-over-year, CPI is projected to cool to 2.8% from 2.9%, signaling a gradual decline in inflationary pressures.
Meanwhile, core CPI, which excludes food and energy prices, is expected to remain steady at 0.3% month-over-month, with a slight decline to 3.1% annually from 3.2%.
US CPI DATA & POWELL’S TESTIMONY SET TO SHAPE CRYPTO SENTIMENT
This week, all eyes are on the US CPI inflation data and Jerome Powell’s testimony before Congress.
With job numbers showing some cooling in the labor market, there’s cautious optimism that the Fed might cut rates… pic.twitter.com/WTbTDAUOos
— Crypto Town Hall (@Crypto_TownHall) February 9, 2025
If inflation data comes in lower than expected, it could reinforce the case for a Fed rate cut, potentially boosting Bitcoin and the broader crypto market. A weaker inflation print would align with last week’s nonfarm payroll report, which showed the US economy added 143,000 jobs in January, below market expectations of 169,000.
However, should CPI figures surprise to the upside, markets could react negatively, with Bitcoin facing downside risks. A higher-than-expected inflation reading would suggest the Fed may maintain its current restrictive policy stance for longer, limiting liquidity in financial markets and putting downward pressure on speculative assets like cryptocurrencies.
Powell’s Testimony and PPI Report Could Shift Market Sentiment
Beyond CPI data, the market is also closely watching the US Producer Price Index (PPI), scheduled for release on February 13. The PPI is another key inflation indicator the Fed considers when assessing its rate policy.
Current forecasts suggest a 0.3% increase for January, up from 0.2% in December. If PPI data exceeds expectations, it could further complicate rate-cut bets and weigh on Bitcoin prices.
Meanwhile, Fed Chair Jerome Powell is set to testify before Congress this week, providing his first major policy update since July. Powell’s statements will be scrutinized for hints about the Fed’s next moves, particularly regarding the potential timing of interest rate cuts.
Given that the Fed kept rates unchanged in its January meeting, investors are eager to hear whether Powell acknowledges any softening in the economy that might justify an earlier policy shift.
Powell’s testimony and inflation data will set the tone for crypto markets in the coming weeks. If policymakers signal a shift toward easing, Bitcoin could attempt another breakout above $100,000.
Conversely, signs of prolonged monetary tightening could lead to increased volatility and a potential pullback toward $90,000 before BTC resumes its uptrend.
Bitcoin Price Prediction: Technical Outlook
Bitcoin (BTC/USD) is trading at $96,280, down 0.34%, as the market consolidates within a symmetrical triangle pattern. The 50-day EMA at $98,241 acts as dynamic resistance, capping upside momentum.
Immediate resistance stands at $97,183, with further hurdles at $98,879 and $100,594. A breakout above these levels could signal bullish momentum, targeting $102,579.
On the downside, $95,089 serves as immediate support, with $93,424 and $91,714 as key downside levels. A break below $95,107 (23.6% Fibonacci retracement) may intensify selling pressure. If CPI cools, Bitcoin could reclaim $100,000, while higher inflation may push BTC toward $90,000 before a rebound.
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
