Bitcoin volatility is expected to kick in any day now as the Consumer Price Index (CPI) reading due today is staring us all in the face, according to a trader we spoke to over at Crypto Rover. We all know that historically CPI releases this year have had a habit of setting off quite a bumpy ride in the world of Bitcoin. Market players had better be bracing themselves for some pretty sharp price movements, depending on just how the inflation data shakes out
Historical Impact of CPI on Bitcoin Volatility
According to a guy named Crypto Rover , Bitcoin’s volatility has been super closely tied to the CPI numbers coming out throughout the year. Every time inflation figures got released, you could expect Bitcoin’s price to go on a wild ride. This pattern really highlights just how sensitive the crypto market is to inflation numbers and all the other economic indicators. And it looks like the recent trend is that traders and investors are super quick off the mark to react to those CPI readings and that’s what’s causing the wild swings in Bitcoin’s price
Potential Price Movements Based on Inflation Outcomes
A trader gets quoted on Crypto Rover as saying that if the CPI inflation numbers are a lot higher than people are expecting, then Bitcoin might find itself taking a hit and heading in the wrong direction all over again. You see this sort of thing playing out time and time again when inflation starts to creep up – it’s a pretty reliable pattern, and it usually ends up with the central banks pulling out the big guns & tightening monetary policy. However, on the flip side, if the CPI data is lower than most traders were looking for then we might see a brief little bounce in Bitcoin, but Crypto Rover isn’t counting on it lasting very long – its still a bearish outlook, at the end of the day. In other words, just like its been for ages, inflation numbers still hold a lot of sway over just how much Bitcoin is going to shake about & whether its heading up or crashing down.
Broader Economic Factors Affecting Bitcoin
The trader also made a point about how the relationship between the Federal Reserve raising interest rates and Bitcoins price trend is a pretty big deal. In 2022, when the Fed first hiked interest rates Bitcoin’s value tanked a whopping 70% from its peak. And then you get the situation with oil prices going up too, which likely just adds to inflationary pressures… which will probably make the Fed raise rates some more. Which in turn is likely to make the whole bitcoin price volatility thing way worse – after all, investors are always going to be trying to figure out how all these macroeconomic shenanigans on the real world side of things affect the crypto market. Crypto Rover warns that these big picture economic influences are basically the main things driving where Bitcoins price goes.
Source — Crypto Rover: https://www.youtube.com/watch?v=-t_z-d6Uans