By Francisco Rodrigues (All times ET unless indicated otherwise)
The U.S. inflation report due later today might shift bitcoin (BTC) out of the doldrums that have mired it this week.
In recent years, the January figure has tended to show significant price hikes. Last year, for example, the month’s data put an end to a series of lower readings, repeating a pattern also seen in 2023. That’s because businesses often evaluate their costs and raise prices at the start of the year, as the Wall Street Journal points out.
A higher-than-expected inflation report could suggest “monetary policy has more work to do,” Dallas Fed President Lorie Logan said in a speech last week. The Federal Reserve has already indicated it isn’t rushing to adjust interest rates after 100 basis points of reductions last year.
Additionally, the implications of the Trump administration’s tariffs are in consideration. The Federal Reserve Bank of Boston points to a potential rise as high as 0.8% to core PCE, the inflation measure the Fed focuses on. However, tariffs had negligible effects in 2018 and 2019.
Conversely, a soft inflation report could be beneficial for risk assets, including bitcoin. A lower-than-expected figure will likely elevate interest-rate cut expectations, potentially weakening the U.S. dollar index and lowering Treasury yields, as reported by CoinDesk’s Omkar Godbole.
Meanwhile, the demand for the largest cryptocurrency remains strong. Recently, Japanese mobile-game studio Gumi announced plans to accumulate around $6.6 million worth of BTC, while KULR Technology Group increased its crypto holdings to 610.3 bitcoin.
Goldman Sachs’ 13F filing also indicates the banking giant significantly increased its exposure to spot bitcoin and ether ETFs in the fourth quarter, along with regular bitcoin purchases by strategy firms.
Bitcoin’s Coinbase premium, which measures the difference between BTC’s price on the U.S. exchange and Binance, recently turned negative, reflecting caution among U.S. traders regarding the upcoming inflation report.
This caution arises amid growing headwinds for the crypto market, which some analysts believe may have reached the peak of its cycle. Research firm BCA Research recently advised clients of signals including record ETF inflows and the memecoin craze that warrant attention.
Moreover, a recent JPMorgan report noted that crypto ecosystem growth slowed last month, with total trading volumes dropping by 24%. However, activity remains ahead of levels observed before the U.S. elections, indicating a need for vigilance.
What to Watch
Crypto:
Feb. 13: Start of Kraken’s gradual delisting of the USDT, PYUSD, EURT, TUSD, UST stablecoins for EEA clients through March 31.
Feb. 13: Story (IP) mainnet launch.
Feb. 14: Dynamic TAO (DTAO) network upgrade goes live on the Bittensor (TAO) mainnet.
Feb. 14, 2:30 a.m.: Qtum (QTUM) hard fork network upgrade.
Feb. 18, 10:00 a.m.: FTX Digital Markets, the Bahamas-based subsidiary of FTX, starts reimbursing creditors.
Feb. 21: TON (The Open Network) becomes the exclusive blockchain infrastructure for messaging platform Telegram’s Mini App ecosystem.
Macro:
Feb. 12, 8:30 a.m.: The U.S. Bureau of Labor Statistics (BLS) releases January’s Consumer Price Index (CPI) report, with estimates for core inflation and overall rates indicating potential shifts.
Feb. 12, 10:00 a.m.: Fed Chair Jerome Powell presents his semi-annual report to the U.S. House Committee on Financial Services; livestream link.
Feb. 13, 8:30 a.m.: The U.S. Bureau of Labor Statistics (BLS) releases January’s Producer Price Index (PPI) report.
Feb. 13, 8:30 a.m.: The U.S. Department of Labor releases the Unemployment Insurance Weekly Claims report for the week ended Feb. 8.
In conclusion, the upcoming inflation report may significantly shape Bitcoin’s trajectory. Investors should remain alert and closely monitor economic indicators that might influence market conditions.
