The cryptocurrency sector continues to struggle with the FTX collapse aftermath, and its flagship asset – Bitcoin (BTC) – isn’t making any significant movements in either direction, but this could change depending on these upcoming events next week.
As it happens, the new United States Consumer Price Index (CPI) report is set to come out on December 13, whereas the meeting of the Federal Open Market Committee (FOMC), during which the agency will discuss possible interest-rate hikes, will conclude on December 14.
The results of these events could have a strong effect on the price of Bitcoin. Specifically, the CPI report, issued by the Bureau of Labor Statistics, will present the changes in the inflation data or the recorded rise in consumer prices during the month of November.
Macroeconomic effects on Bitcoin
Should the CPI data come in high, it could put additional pressure on the price of Bitcoin, like it happened in June, when the CPI’s inflation numbers for May were the highest since November 1981 and Bitcoin wiped $15 billion from its market cap in only ten minutes.
However, if it comes in lower than expected, as was the case the month before, Bitcoin could finally get the push needed to rally. Indeed, after the previous CPI data for October came in low, Bitcoin reacted by adding $15 billion to its market cap in just 15 minutes. A similar thing happened in August when the crypto market added over $50 billion in one hour upon favourable CPI data.
Meanwhile, interest-rate increases by the Federal Reserve (Fed) could create pressure on the stock market, and considering the correlation between crypto and stocks, this could have an unfavourable effect on Bitcoin as well.
On the other hand, should the Fed slow down its action on interest rates, it could make stocks more appealing as an investment and push the crypto markets as well.
According to the predictions by financial analyst Seth_fin, CPI data could amount to 7.4 points inflation increase, with a 0.2 variation, whereas he predicts the FOMC rate hike of 50 basis points (BPS) or 0.5%, which he believes is “ok for Bitcoin.”
Bitcoin price analysis
At press time, Bitcoin is trading at the price of $16,846, which demonstrates a slight increase of 0.02% on the day but still a decline of 1.39% compared to the previous seven days, adding up to the 13.16% drop over the month.
With a market cap of $323.92 billion, the flagship decentralized finance (DeFi) asset remains the largest cryptocurrency by this indicator, as per CoinMarketCap data retrieved on December 8.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
