Analysis: Bitcoin May Rise on US CPI Slowdown, but Major Rally Seems Unlikely

On February 12th, as per the report by CoinDesk, a moderately inflation report to be released later on Wednesday might be beneficial to risk assets such as Bitcoin (BTC). Nevertheless, those anticipating a strong bullish rally might be let down. The U.S. Department of Labor will put out the Consumer Price Index (CPI) report for January on Wednesday at 13:30 UTC. According to the forecast tracked by Reuters on FXStreet, the report is anticipated to demonstrate a 0.3% month-on-month increase in living costs in January, which is a deceleration from December's 0.4% rise. The annualized data is expected to remain unchanged at 2.9% compared to December. If the data turns out to be lower than expectations, especially with lower core inflation data, it could reinforce the market's expectation of the Federal Reserve (Fed) implementing further interest rate cuts. This could lead to a decline in U.S. bond yields and a weaker U.S. dollar, thereby spurring the demand for risk assets. According to the CME's FedWatch tool, the market currently estimates a 54% probability of the Fed cutting rates once this year or not cutting at all. Although the Fed rate cut expectations may boost BTC, it is unlikely to be the sole factor for breaking out of its current consolidation range of $90,000 to $110,000. This is because forward-looking market indicators suggest that inflation may rise in the upcoming months, along with trade war concerns, indicating that the Fed may only have a limited period to implement aggressive rate-cutting policies.