Bitcoin Eyes CPI Data Today: Fed Policy & Price Impact Explained

Bitcoin (BTC) is stuck in a tight range between $90,000 and $110,000, unable to break free. Despite multiple attempts to push higher, it keeps getting pulled back. So, what’s holding Bitcoin down?

The answer lies in a mix of economic uncertainty, U.S. inflation concerns, and the Federal Reserve’s next move. Investors are on edge, waiting for clues that could either send Bitcoin soaring or drag it lower. With a key inflation report coming up and speculation around interest rates growing, BTC’s next move could be just around the corner.

Here’s what you need to know.

Investors Wait for Clarity

In the past 24 hours, Bitcoin’s market cap has fallen to $1.9 trillion. Last year, the crypto market took a hit after hawkish comments from the Federal Reserve, but BTC partially recovered in January after Donald Trump’s inauguration and growing attention on his Bitcoin reserve plan.

Right now, investors are uncertain. Many are waiting for clearer crypto regulations before committing to a full-scale rally.

Economic Reports to Watch

The upcoming U.S. Consumer Price Index (CPI) report will reveal how much prices have risen and could influence Bitcoin’s next move. If inflation comes in lower than expected, investor confidence may rise, pushing Bitcoin slightly higher.

Economists predict a 0.3% increase in CPI from last month, slightly lower than December’s 0.4%. Core inflation, which excludes food and energy prices, is expected to rise by 0.3%, up from 0.2% in December.

While this might sound positive, it may not be enough to trigger a major Bitcoin rally. Investors are watching closely to see if softer inflation will push the Fed to cut interest rates – something that would benefit Bitcoin. However, that’s unlikely to happen soon.

Federal Reserve Still Holding Bitcoin Back

The Federal Reserve plays a crucial role in Bitcoin’s price movement. Even if inflation cools, the Fed is in no rush to cut interest rates. Fed Chair Jerome Powell Jerome Powell Jerome Hayden "Jay" Powell is an American attorney and investment banker who has served since 2018 as the 16th chair of the Federal Reserve Finance recently made it clear that rate cuts aren’t coming quickly. Major financial firms like BlackRock and RBC also expect the Fed to keep rates high this year.

According to the CME FedWatch tool, there’s only a 54% chance of even one rate cut this year. Without lower interest rates, Bitcoin struggles to gain strong upward momentum since higher rates make traditional investments more attractive compared to crypto.

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Rate Cut Expectations Drop – Is Bitcoin in Trouble?

Crypto analyst Neil Sethi noted that the probability of a rate cut by June has dropped below 50% to 48%, while the chance of two cuts in 2025 has fallen to 42%. There’s now a 20% chance of no rate cuts at all, up from 50% after the January FOMC meeting.

Inflation expectations are also rising. Data from Mott Capital Management shows that two-year inflation expectations have climbed to 2.8%, the highest since early 2023. This suggests investors expect prices to keep increasing, making it even harder for the Fed to justify rate cuts. Trade tensions and potential new tariffs are adding to inflation fears.

What’s Next for Bitcoin?

If inflation turns out to be higher than expected, Bitcoin could drop toward the lower end of its range. If inflation is lower, BTC may see a small rally. However, without a clear sign that the Fed will cut rates soon, Bitcoin is likely to stay stuck in its current range for now.

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Bitcoin’s next big move hinges on inflation and the Fed – until then, the market remains in wait-and-see mode.