The price of Bitcoin touched the $37,900 level last week for the first time since May 2022 before retreating to $36,664 at the beginning of Tuesday’s trading.
The price is currently trading within a downward correction, erasing most of its weekend gains. This coincides with traders eagerly awaiting the release of the U.S. Consumer Price Index (CPI) data later today and the Consumer Price Index report for October tomorrow.
The expected increase in the core Consumer Price Index, a key inflation measure favored by the Federal Reserve, is projected to be 0.1% every month in October, a significant drop from the 0.4% increase the previous month.
In recent statements, Federal Reserve Chairman Jerome Powell mentioned that the central bank would not hesitate to raise interest rates to ensure price stability. He expressed uncertainty about the Fed achieving its goals regarding controlling stubbornly high inflation.
Bitcoin traders are currently cautious, as the core Consumer Price Index, excluding volatile items such as food and energy, is expected to show a long-term inflation trend at 4.1% on an annual basis and 0.3% every month.
In my view, if the data is as expected, a decrease in core inflation is likely to have an immediate positive impact on stocks and put pressure on the U.S. dollar, even if the core Consumer Price Index remains stubbornly high. High inflation is expected to increase selling pressure on high-risk assets such as Bitcoin and cryptocurrencies.
Therefore, I believe that the short-term direction of Bitcoin’s price will be influenced by the October Consumer Price Index report.
Economic data typically has short-term effects on Bitcoin price fluctuations. Higher inflation figures usually lead to short-term decreases in Bitcoin prices, while long-term price expectations depend on stimuli and regulatory events, such as the approval of a Bitcoin exchange-traded fund (ETF).
Recently, speculation about the approval and immediate launch of the first Bitcoin ETF has driven price movements upwards. Some positive news about this event could come next Friday, as most investors are already pricing in approval by mid-January 2024 based on the dates by which the Securities and Exchange Commission (SEC) must decide on the submitted applications.
It’s worth noting that, coinciding with the increase in whale transactions in the cryptocurrency market, valued at $100,000 or more recently, the price of Bitcoin has gained approximately 35% since the current uptrend began in mid-October.
In my opinion, this is evidence that the U.S. Securities and Exchange Commission may approve some Bitcoin exchange-traded fund applications before the deadline on January 10.
The comment period for many companies that applied for ETFs ended last Wednesday, so I believe some approval decisions may be made in the period from November 14 to 17.
Large Bitcoin transfers are usually associated with profit-taking, leading to a downward correction in the Bitcoin price, but the upward trend and strong signals from technical indicators continue. This is currently happening in Bitcoin price transactions.