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The US CPI data is set to be released today at 12:30 UTC and the crypto market is bracing for a potential turning point. Investors are asking: will the US CPI data spark a fresh rally or bring the recent momentum to a halt?
Following last week’s positive surprise when producer inflation (PPI) eased by 0.7% in August many are now looking to the US CPI data for the next signal.
According to a Reuters poll, economists expect the consumer price index to rise 0.3% month over month in August following a 0.2% increase in July. Year on year, the index is forecasted to climb 2.9%, compared to 2.7% previously. Still, there remains the risk of a hotter than expected reading.
A softer US CPI data print would reinforce expectations that the Federal Reserve may ease monetary policy soon. Traders are pricing in the possibility of a 25 basis point rate cut at the Fed’s meeting next Wednesday with a slimmer chance of a 50 basis point reduction as suggested by the CME FedWatch tool.
If the US CPI data confirms rising inflation, alternative assets such as gold and crypto could benefit as hedges. Higher inflation has historically served as a tailwind for Bitcoin giving traders hope for another rally. On the other hand, if the US CPI data comes in below forecasts it could strengthen the U.S. dollar dampening crypto and gold. An inflation rate that’s too high, however, could force the Fed to delay rate cuts altogether halting any short term crypto upside.
The overall crypto market has shown strength leading up to today’s release. CoinGecko data shows Bitcoin up 1.4%, Ethereum rising 2.6% and XRP gaining 1.1%. Market cap has pushed above the $4 trillion psychological level with a 1.6% increase.
Bitcoin, the largest cryptocurrency is consolidating above $114,000 after its recent rally. Technicals show muted momentum, with RSI hovering near 35–40, indicating neutral to slightly bearish conditions. Resistance lies between $114,000 and $114,250 with immediate support at $113,500.
This compression reflects a market waiting for the US CPI data as the key catalyst. If the report comes in softer than expected, Bitcoin could break resistance and aim higher. However, if the US CPI data signals stronger inflation pressures, the dollar could firm triggering rejection at resistance and pushing BTC back toward $113,500 or even the $110,000–$107,000 zone.
Markets have largely priced in softer inflation after last week’s PPI data making a hotter than expected data release capable of sparking a sharp downside move.
Adding to the anticipation, Binance stablecoin reserves hit an all time high yesterday climbing by $6.2 billion to reach at least $39 billion. This influx suggests traders are parking funds on exchanges, ready to deploy once the CPI data provides direction.
