Bitcoin Faces October CPI Test as Analysts Warn Inflation Relief May Not Sustain Recovery
Bitcoin was trading near $74,750 on Tuesday as investors awaited the release of U.S. October inflation data, with analysts warning that a softer consumer price index (CPI) reading could provide short-term support for risk assets but may not be enough to establish a lasting cryptocurrency recovery.
The largest cryptocurrency by market capitalization was down 0.6% from midnight UTC at the time of reporting, after briefly climbing above $75,000 during overnight trading. The upcoming inflation report is expected to offer fresh clues about the Federal Reserve's monetary policy outlook and the direction of financial markets heading into the end of the year.
October CPI Forecast Points to Slower Inflation
The U.S. consumer price index report was scheduled for release at 8:30 a.m. Eastern Time. Dow Jones consensus estimates projected headline CPI would increase 0.3% month over month in October, while core CPI, which excludes food and energy, was expected to rise 0.2%.
Both forecasts would represent slower monthly increases than September, when headline inflation rose 0.6% and core inflation advanced 0.3%, respectively.
However, the October report will not include a year-over-year comparison. A government shutdown in October of the previous year prevented the Bureau of Labor Statistics from compiling a complete index level, leaving the agency without a comparable annual figure.
Bitcoin Remains Under Pressure as ETF Demand Weakens
The inflation release comes as Bitcoin faces a difficult market environment. The cryptocurrency has been in a short-term downtrend since reaching a peak above $87,000 in early October, while concerns surrounding artificial intelligence-related developments have weighed on U.S. equities.
Spot Bitcoin exchange-traded funds, which many bullish investors had expected to provide sustained demand through the end of the year, have also lost momentum. With ETF demand weakening, Bitcoin's recovery increasingly depends on broader macroeconomic conditions and renewed buying in the spot market.
Analysts at BRN said easing inflation expectations could offer some support to risk assets. However, they cautioned that Bitcoin requires stronger underlying demand rather than relying on a favorable inflation reading alone.
“Any easing in inflation expectations would help risk assets,” BRN analysts said. “[But], Bitcoin needs real buying, not a lucky break. Until ETF flows turn positive and the Fed turns dovish, the path of least resistance remains lower.”
Bitget Wallet Analysts See Liquidity as Key to Recovery
Analysts at Bitget Wallet also highlighted the importance of the October inflation figures, noting that hotter-than-expected readings could strengthen expectations of a Federal Reserve rate increase in December. Conversely, softer core inflation could support a temporary relief rally across financial markets.
In an email, the analysts said a more sustainable Bitcoin recovery would require improvements in liquidity and spot-market demand, rather than relying solely on favorable macroeconomic data.
“This week's inflation data adds another test. Hotter readings could reinforce December rate-hike expectations, while softer core inflation could trigger a relief rally. But a durable Bitcoin recovery will depend on improving liquidity and spot demand, not macro relief alone,” they said.
More U.S. Economic Data Ahead of December Fed Decision
The CPI report is the first of several important U.S. economic releases scheduled over the coming days. Producer price index data is due on November 13, followed by the minutes from the Federal Reserve's October meeting on November 18. The personal consumption expenditures report, which measures the inflation gauge preferred by the Federal Reserve, is scheduled for November 25.
Utkarsh Ahuja, founder and managing partner of Moon Pursuit Capital, warned that persistent inflation could restrict the Federal Reserve's ability to provide monetary policy support, even if technology stocks continue to weaken.
Ahuja also pointed to recent comments from San Francisco Fed President Mary Daly regarding the possibility of further interest rate increases. Those remarks, he indicated, give investors reason not to assume that the central bank will provide an immediate policy response to support markets.
For Bitcoin, the combination of inflation data, Federal Reserve expectations and ETF demand remains central to the near-term outlook. Even if October's figures show slower price increases, analysts argue that stronger spot buying and improved liquidity will be necessary to support a more durable recovery.
source: coindesk
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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