The upcoming US inflation report could benefit high-risk assets like Bitcoin (BTC), but may not meet expectations for a significant uptrend. The US Labor Department is set to release the Consumer Price Index (CPI) report for January on Thursday at 13:30 GMT. Predictions suggest a 0.3% increase in living costs in January compared to the previous month, a decrease from December’s 0.4%. Core inflation in January is expected to increase from 0.2% to 0.3%, with the annual rate likely to be 2.9%, similar to the previous month. If inflation data falls below expectations, especially core inflation, the possibility of the Federal Reserve lowering interest rates may increase. This could lead to a decrease in Treasury bond yields, a weakened dollar, and consequently, increased demand for high-risk assets. However, a potential interest rate cut might support Bitcoin’s growth, but alone, it may not be enough to push its price above the $90,000 to $110,000 range. Concerns about the trade war could escalate inflation in the coming months and hinder the Federal Reserve’s expansionary policies. Data from Mott Capital Management shows that two-year inflation swaps have reached 2.8%, the highest level since early 2023. Similarly, five-year inflation swaps indicate a similar trend, reflecting increasing inflation expectations in the market. Progress towards the Fed’s 2% inflation target has stalled, and price pressures may rise in the future. Some analysts believe this could be influenced by proposed tariffs by Donald Trump. Investment banks also predict that even if the January CPI index is lower than expected, the Federal Reserve will continue to maintain its stringent policies. BlackRock believes that ongoing inflation in the services sector will lead the Federal Reserve to keep interest rates high for a longer period. Ultimately, if the CPI index exceeds expectations, Bitcoin might plummet to the lowest price range of $90,000 to $110,000. Visit the real-time digital currency price page to monitor the prices of all tokens and cryptocurrencies live.
