BTC encounters a pivotal week ahead, having stabilised near $80,000 over the weekend. However, a series of significant economic events in the US could influence its duration at this level. Following last Friday’s strong US jobs report and the subsequent unusual rise in expectations for an upcoming Fed rate hike, risk-on assets are entering the final week before the crucial FOMC meeting scheduled for September 15-16. In the forthcoming days, inflation data is poised to influence whether BTC sustains its recovery trajectory or encounters another significant correction. Monday is anticipated to be a quiet day as the US financial markets will be closed in observance of Labour Day. There are no significant events on the calendar for Tuesday, and the upcoming 10-Year US Note Auction on Wednesday is expected to have minimal influence on the cryptocurrency market.
The first significant evaluation arrives on Thursday, marked by the publication of the August PPI data, which assesses inflation from the perspective of producers. Economists anticipate a 0.4% month-over-month increase in headline PPI, contrasting with the absence of any increase in July. The core PPI is anticipated to be 0.3%. Annual producer inflation is expected to rise from 4.7% to 5.4%. A hotter reading could reinforce expectations that inflationary pressure is rebuilding, particularly as oil prices remain elevated due to the resumed conflict in the Middle East. Friday will hold heightened significance for all financial markets, particularly for risk-on alternatives such as cryptocurrency.
The CPI report is set to be released, with projections indicating that inflation will persist at approximately 3.3%-3.4% annually, while core CPI is anticipated to decline from July’s 2.5%. The actual results could exert a considerable and prompt influence on expectations regarding Fed rate hikes. Once again, a higher-than-expected CPI reading would bolster the case for an additional rate increase, potentially exerting downward pressure on BTC while simultaneously elevating Treasury yields, and conversely. In light of the hawkish position articulated by Fed Chair Kevin Warsh at the conclusion of August, coupled with the robust US jobs report released last Friday, the forthcoming inflation data will be pivotal in shaping the central bank’s subsequent actions.
That move will occur on September 16, rendering this week’s data significantly more critical. Bitcoin responded to the hawkish remarks by Warsh and the jobs report with a swift decline, resulting in a drop of $2,000-$3,000 within a matter of hours. It managed to stabilise at around $80,000 even as bearish news and expectations mount; however, a higher CPI reading is unlikely to bolster its bullish case ahead of the FOMC meeting, particularly given that the odds for a rate hike exceed 50%.
