Bitcoin
Bitcoin (BTC) Price Could Follow Inflation Data This Week
Bitcoin (BTC) managed a modest recovery in the last 72 hours after an ugly close last week, but three important economic reports later this week are among the factors likely to trigger more volatility.
At press time, the world’s largest cryptocurrency was trading at $62,700, up 2% in the past 24 hours, according to data from CoinDesk, and 4% ahead of Friday’s low. The wider CoinDesk 20 Index it was higher by 1.25% in the last 24 hours.
With spot bitcoin ETF buying slowing and even going negative on some days, macrocatalysts have taken on greater importance lately. This was evident in US hours Friday morning, when an unexpected rise in consumer inflation expectations combined with hawkish comments from Dallas Fed President Lori Logan to send bitcoin dropping $3,000 within minutes from the $63,300 level.
The next negative or positive catalysts will likely come from US inflation reports, namely the Producer Price Index (PPI) scheduled to be released on Tuesday at 8:30 am ET and the Consumer Price Index (CPI) 24 hours later.
Of the two, the CPI report is the most important and economists predict that this indicator will have risen 0.4% in April, in line with the advance in March. The annual pace of the global CPI is expected to slow to 3.4%, from 3.5% in March. The so-called core CPI – which excludes food and energy costs – is expected to increase 0.3% in April, compared to 0.4% in March, with the annual pace falling from 3.8% to 3.6%.
It was stubbornly high inflation that altered market expectations for a series of Federal Reserve rate cuts in 2024. To date, there have been exactly zero rate cuts and markets are now betting on an 11% probability that the Fed keep your arms crossed. the rest of the year, according to CME FedWatch. Another snap report on inflation could not only cause investors to abandon hope for easier monetary policy in 2024, but it could also make them start evaluating the odds that the Fed’s next move will be a benchmark rate hike. .
Wednesday will also bring the US government’s retail sales report for April, which should not be overlooked as an important piece of data. Coupled with high inflation, the US economy has shown little sign that it needs lower rates. While there has been a modest slowdown of late, job gains continue to impress each month and retail sales numbers show healthy consumer spending.
Economists’ forecasts are that retail sales will have grown 0.4% in April, compared to 0.7% in March. Excluding autos and gas, retail sales in April are expected to increase just 0.1% versus 1.0% in March.
Investors will also be able to hear from Fed Chairman Jerome Powell, who at 10 a.m. ET on Tuesday is expected to participate in a moderated discussion with Dutch central bank governor Klaas Knot at the Foreign Bankers Association’s annual general meeting in Amsterdam. In early May, Powell rejected ideas that the US economy was at risk of falling into “stagflation” – a term made famous during the 1970s that means slow or negative economic growth combined with rapid inflation.
“I don’t see ‘deer’ or ‘flation,’” Powell said at a May 1 press conference. Market participants may want to stay tuned on Tuesday to see if recent data is changing their minds.