Bitcoin (BTC) Poised to Breakout from Current Consolidation Range on Looming CPI Data

The crypto market is closely watching today's release of the January consumer price index by the U.S. Labor Department.

Bitcoin (BTC) is consolidating within a narrow range of $90,000 – $110,000 ahead of today’s release of the January consumer price index (CPI) data by the U.S. Labor Department.

The crypto market at large and BTC investors in particular are closely watching the CPI report, which is expected to trigger a breakout for Bitcoin from its current consolidation range.

The CPI data is set to be released at 13:30 UTC and is anticipated to show a modest month-on-month increase of 0.3%, which is slightly lower than the 0.4% increase reported in December.

This reading will likely be a key factor in influencing the Federal Reserve’s next move on interest rates.

According to the CME’s FedWatch tool, there is currently a 54% probability that the Fed will either reduce rates or leave them unchanged this year.

If the CPI report comes in lower than expected, it will likely trigger a drop in Treasury yields and a weaker U.S. dollar. Both of these outcomes would tend to increase demand for risky assets like Bitcoin, which has been consolidating between $90,000 and $110,000.

In a recent post on X, Martinez pointed out that “BTC accumulation trend score is near zero, signaling a period of consolidation. A shift in demand here could set the stage for the next big move!”

$BTC accumulation trend score is near zero, signaling a period of consolidation. A shift in demand here could set the stage for the next big move! pic.twitter.com/0nSIt1qKY8

This suggests that investors are likely awaiting a catalyst for the price to break out, with the upcoming CPI report potentially serving as that catalyst.

While investors are hoping that a positive CPI report will boost Bitcoin, forward-looking indicators of inflation suggest that higher inflation could be on the horizon. This could limit the Fed’s ability to aggressively cut rates, dampening expectations for a sustained Bitcoin rally.