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As the U.S. Bureau of Labor Statistics is set to release the Consumer Price Index (CPI) data, Wall Street heavyweights, such as Barclays, HSBC, Morgan Stanley, UBS, Wells Fargo and Goldman Sachs, predict a decrease in annual inflation to 5.1%, while JPMorgan, Citi, and CIBC anticipate that CPI will remain the same at 5.2%. In contrast, Bank of America and Bank Of Montreal predict inflation to rise to 5.3%, while VISA estimates it will reach 5.4%. Bitcoin’s price is expected to experience a continuation of its recent upward rally as the market anticipates a decline in inflation. This article discusses the potential impact of the CPI announcement on Bitcoin’s price, the US Dollar Index, and Federal Reserve policy.

The General Consensus on U.S. CPI Data

It is anticipated that annual inflation will increase by 5.2% year-over-year after a 6% jump in February. The core reading, on the other hand, is expected to increase to 5.6%, up from the previous reading of 5.5%. While traders anticipate the release of the CPI print, Wall Street heavyweights generally predict that the Consumer Price Index will be 0.3% on a monthly basis, while the Core CPI is expected to come in at 0.4%. The CPI announcement will determine whether the Federal Reserve will choose to further tighten monetary policy in the United States or not. The Fed had previously opted to reduce the interest rate hike by 25 basis points (bps) due to indicators showing that U.S. inflation was cooling down.

Bitcoin’s Price Reaction

Bitcoin’s price is currently at $30,152, representing a 6% increase over the past 24 hours and a 7.56% gain over the previous seven days. The decline in inflation is expected to lift the crypto market, which is already experiencing bullish sentiments over Bitcoin’s recent price swing. The US Dollar Index (DXY) fell to 102.23 today after maintaining its upward trend for the past week. As compared to DXY, the digital asset market tends to move in the opposite way. As a result, a drop in the DXY will be an essential component to monitor in light of the unpredictable market conditions. CoinGape’s price tracker presently recommends a “strong buy” position, advising a “buy” at level 17 and a “sell” at level 1 by its moving averages.

What’s Next for Bitcoin and Investors?

Investors are excited about the prospects of a repeat attack on $30,000 resistance, but a lot stands in the way. The Ethereum Shanghai upgrade is also set to create volatility in the market. The release of the CPI data for March, scheduled for April 12, is also expected to cause heightened volatility in risk assets, making that date a key area to watch for “fakeouts” in crypto markets. The Federal Reserve will produce the minutes of its latest Federal Open Market Committee (FOMC) meeting, during which it opted to continue raising interest rates. While traders want to see inflation receding faster than expected, the Fed itself remains hawkish, stating that further interest rate hikes may be appropriate. However, sentiment data suggests that the market does not believe rate hikes will continue much longer.