Bitcoin’s potential to break its all-time high depends on a decrease in US inflation next month, according to crypto analyst Markus Thielen of 10x Research. In a recent report, Thielen stated that if the US Consumer Price Index (CPI) is at 3.3% or lower, Bitcoin could surpass its historical peak.
What’s Happening on the Bitcoin Front?
A minor 0.1-point drop from the last CPI figure of 3.4% on May 15 is crucial, Thielen noted. He anticipates significant spot Bitcoin exchange-traded fund (ETF) inflows in the two weeks leading up to the May CPI announcement. However, if inflation rates exceed expectations, Bitcoin’s momentum could falter, a pattern observed earlier this year.
Since May 13, Bitcoin ETF inflows have consistently been positive, with May 21 recording the highest single-day inflow at $305.7 million, according to Farside data. Thielen emphasized that Bitcoin price movements are not random and are significantly influenced by crucial factors, primarily inflation.
Macroeconomic Data and Bitcoin
On April 10, the CPI was reported at 3.5%, slightly above expectations. Consequently, Bitcoin’s price dropped by 6.67% to $56,000 on April 30. Despite impressive inflows of $611 million on January 11, the rest of January saw disappointing figures. Thielen attributes this trend to higher-than-expected CPI results.
He explained that Bitcoin’s performance in different months of the year has been closely tied to CPI results, with January being weak, March showing strength, and subsequent months being more consolidated.
Key Insights for Investors
Thielen’s analysis offers several actionable insights:
- Monitor upcoming CPI data closely to anticipate Bitcoin price movements.
- Expect increased Bitcoin ETF inflows in periods leading up to CPI announcements.
- Understand that higher-than-expected inflation rates can negatively impact Bitcoin prices.
- Historical data shows that Bitcoin reacts sensitively to macroeconomic indicators.
In conclusion, the crypto market’s reliance on macroeconomic indicators like the CPI cannot be understated. Investors should stay informed about inflation trends to strategically navigate Bitcoin investments.