Bitcoin (BTC) is back on an upward trajectory, reclaiming $82,700 after a sharp decline over the weekend. The leading cryptocurrency plunged 9.14% on Sunday, breaking below its 200-day Exponential Moving Average (EMA) at $85,664 before finding support at $78,258. A strong rebound on Tuesday saw BTC recover 5.52%, with traders now closely watching US inflation data for further market direction.
CPI and PPI Data to Influence Market Volatility
The upcoming US Consumer Price Index (CPI) release on Wednesday and Producer Price Index (PPI) data on Thursday are expected to impact risk assets, including Bitcoin. A softer inflation print could reinforce expectations of Federal Reserve rate cuts, potentially benefiting crypto markets. However, if inflation remains high, the Fed may stick to its restrictive stance, limiting BTC’s upside potential.
Agne Linge, Head of Growth at WeFi, noted that while investor sentiment remains cautious, the crypto market continues to show “risk-on” behaviour. Despite a recent announcement of Bitcoin reserves in the US, sell-offs have persisted since March 3, with long traders facing significant liquidations.
Macroeconomic and Geopolitical Risks Weigh on Sentiment
The broader macroeconomic landscape presents mixed signals for crypto markets. While the US labour market remains resilient, adding 151,000 jobs in February, unemployment has ticked up to 4.1% due to government job cuts. Strong wage growth could support consumer spending, but inflationary pressures may complicate the Fed’s policy outlook.
Trade tensions between the US, China, Mexico, and Canada add another layer of uncertainty. Bitfinex’s latest report highlighted cautious business expansion, inflation risks, and global economic instability as key factors influencing market sentiment.
Fed Policy Outlook Holds the Key for BTC
With inflation data set to shape Fed rate expectations, Bitcoin’s price trajectory remains uncertain. If CPI data shows a decline, market optimism could drive BTC higher. Conversely, sticky inflation may dampen expectations of rate cuts, leading to potential sell-offs in crypto markets.
Additionally, concerns over Donald Trump’s trade policies could push investors toward safer assets like gold instead of speculative markets such as Bitcoin. As traders navigate these uncertainties, BTC remains highly sensitive to macroeconomic developments.
