According to traders, US inflation could determine the direction of bitcoin price

Bitcoin (BTC) remains steady, trading near its yearly highs for three weeks, but an event could impact it. This is the inflation that the US Consumer Price Index (CPI) will report on Wednesday, July 12th.

According to the popular trader named Crypto Tony, Bitcoin will remain in the “omnipotent range” of $29,800 to $31,400 until the release of the inflation data. And in line with that, he believes altcoins will continue to run without major swings until then.

However, although he expects the market to remain stable for a few more hours, recommended “Proceed with caution ahead of CPI.” This is because “exits are common as it gets closer” and “everyone is excited” which could lead to a price drop.

For this reason, in his case, he announced that he would wait for the inflation data release to see if Bitcoin breaks out of the range it is in, be it up or down. And once it’s there, it will take a stand. “We just played the breakout (break),” he said.

As Crypto Tony once noted, analyst Michaël van de Poppe said stressed that the cryptocurrency market tends to over-behave amid CPI fears. and commented on that May Lead To Bitcoin Price “Correction” “Before It Bounces Again”.

On the other hand Ornella Panizza, trader known as “Lady Market” called that “US CPI could be the trigger” for Bitcoin to break out of its current range. With that in mind, it suggests that if the market takes the data well, the price could break out higher.

Meanwhile, he added that the cryptocurrency continues to show “significant rejection” in the $31,000 resistance zone, CriptoNoticias reported.

Market analyst Juan Rodríguez commented The Inflation is expected to be 3.1%., a value not reached since April 2021. That would continue to bring it closer to the country’s Federal Reserve (Fed) 2% target. This report would be “positive” for the bitcoin market, he said.

In any case, Rodríguez made it clear that this information could in turn bring “bad news”. “It has dropped dramatically and reached levels expected by the Fed,” he clarified. “So this is the latest representative drop that I would expect as the already high months of inflation come out and the year-to-year comparison starts to measure up against low months,” he added.

Specifically, inflation in the United States has been falling for a year after peaking at 9.1% in July 2022. With this in mind, Rodríguez concluded that we could see CPI “stagnation” in the coming months. and thought about it This could be the last reaction of the bitcoin market.

Why US inflation could affect BTC

Aside from the fact that Bitcoin is a decentralized cryptocurrency that is not controlled by any government or financial institution, Its price tends to react to US inflation data. And for several reasons.

In principle, economic data from major powers, such as inflation in the USA, can influence general market sentiment. Lower inflation could positively impact investor sentiment for assets like bitcoinleading to greater demand and hence price increases.

If investors are pessimistic about the economy due to high inflation, they might choose to sell their assets, including Bitcoin, instead. This can lead to a price drop. However, it should be noted that negative economic data does not always drag the market down.

many investors They view bitcoin as an asset that can act as a hedge against inflation. This means that some people buy cryptocurrencies when inflation rises, hoping their value won’t depreciate as much as fiat currencies like the US dollar. And when the demand for BTC grows, it increases.

Also, keep in mind that inflation can affect the Fed’s monetary policy decisions. When the CPI is high, the agency usually raises interest rates to try to bring it down.

This can cause investors to turn away from riskier assets like bitcoin, affecting their prices, and into more stable assets like government bonds and the US currency. Conversely, the opposite tends to happen when interest rates are falling or a pivot is imminent, which is likely to happen soon given lower inflation in the United States.