BTC ahead of CPI: A more favourable macro backdrop

Bitcoin has recovered to around 114,000 USD, thanks to improved sentiment after U.S. PPI came in at -0.1% m/m (both headline and core), contrary to the +0.3% forecast and below the prior +0.7%.

This data shows that price pressures at the production stage are cooling, pulling real yields and the USD lower.

This is an environment that is typically more friendly to risk assets, including Bitcoin. In addition, last week’s U.S. labour picture showed signs of slowing (NFP up 22K, unemployment 4.3%, JOLTS 7.18 million, ADP up 54K), contributing to higher expectations that the Federal Reserve will soon enter a rate-cut cycle.

In the short term, the upcoming CPI is the decisive catalyst. A “soft” scenario (current consensus: Core 0.3% m/m, headline 0.3% m/m, y/y 2.9%) will reinforce the easing narrative, continue to pressure real yields and weaken the USD, thereby supporting risk appetite and opening room for BTC’s rebound. Conversely, a “hot” surprise could force the market to reprice the rate path ahead of the mid-September FOMC, increasing volatility and making profit-taking risks more significant.

In addition, a positive sign is that the pace of net outflows from spot Bitcoin ETFs has slowed compared to last month showing that panic has subsided. However, to confirm a durable recovery cycle, the market needs to observe a series of consecutive net-inflow sessions in ETFs rather than the mild brightening sessions as at present. Institutional flows tend to require conditions across three factors: favourable inflation data, consistent messaging from the Fed, and a regulatory framework without new shocks.

At the derivatives and market structure layer, after the correction since mid-August, the market has been partially restructured; this is a necessary condition for a healthier recovery. Indicators such as funding/basis returning near neutral and open interest not ballooning too quickly when price has not broken out strongly are good signs. This implies that any advance (if any) will be led by spot flows rather than short-term leverage. Combined with stablecoin liquidity if it continues to grow on a net basis this will be an early indicator of new money ready to enter the market.

The geopolitical picture remains an unpredictable variable. Developments such as UAVs being shot down in Polish airspace amid the escalating Russia–Ukraine conflict, or tensions in the Middle East, can affect energy prices and inflation expectations—an indirect transmission channel to rate positioning and the USD. In a highly uncertain environment, Bitcoin is sometimes seen as an alternative asset, but in reality BTC’s reaction is often more sensitive and two-sided than gold. Data and headline shocks can amplify short-term volatility.

Looking at risks, there are points to note when stubborn inflation causes real yields to rise again, combined with ETFs returning to prolonged heavy net outflows and legal/regulatory shocks undermining institutional confidence—these three factors will put pressure on Bitcoin. Conversely, a prolonged string of “soft” data, clear easing signals from the Fed, and sustained ETF inflows will reinforce the uptrend.

The short-term outlook ahead is a “wait-for-data” state, with volatility governed by the CPI to be released today. A favourable scenario (CPI below expectations) can help BTC maintain the recovery base, improve flows, and head toward retesting recent highs. A less favourable scenario (hot CPI) will push the USD/yields higher, increasing the risk of retesting prior support zones as investors de-risk ahead of the FOMC.

Meanwhile, the medium-term outlook remains mildly constructive. If the monetary-easing cycle truly starts and spot ETFs shift to a sustainable inflow streak, BTC has the foundation to extend the medium-term uptrend; conversely, a prolonged bout of “hot” inflation or unexpected regulatory risks could break the rebound, forcing the market back into a wide-range accumulation phase.