CPI Inflation of ‘3.3% or lower’ Holds the Key to New Bitcoin All-Time High, According to 10x Research
Renowned analyst Markus Thielen, Head Researcher at 10x Research and the same analyst who accurately predicted the pre-halving Bitcoin all-time high, has emphasized the importance of a June CPI reading of ‘3.3% or lower’ for a potential new all-time high.
In a recent report by 10x Research, Thielen shared his insights, stating that despite Bitcoin price movements appearing random, they are actually influenced by fundamental factors. He specifically pointed out inflation as the main driver and highlighted the significance of the upcoming CPI results release by the US Bureau of Labor Statistics (BLS) on June 12.
Thielen firmly believes that for Bitcoin to surpass its previous all-time highs achieved in March, a slowdown in US inflation must be observed in the upcoming results. He stated, “If inflation prints 3.3% or lower, Bitcoin should make a new all-time high.” This represents a slight decrease of 0.1% compared to the previous CPI result of 3.4% on May 15.
However, Thielen expressed concern over the potential impact of higher-than-expected CPI readings. He believes that if the CPI reading is higher than anticipated, it may weaken Bitcoin’s momentum. This has been evident in previous instances throughout the year, where Bitcoin’s price declined following higher-than-expected CPI results.
For example, on April 10, when the CPI was reported at 3.5% (0.1% higher than expected), Bitcoin experienced a significant decline of 6.67%, dropping to $56,000 by April 30. In contrast, on May 15, Bitcoin surged over 5% to $65,000 following a CPI decrease. The CPI dropped to 3.4% (0.1% lower than expected), resulting in a boost to Bitcoin’s price.
These examples illustrate how even a slight increase in the CPI can negatively impact Bitcoin’s momentum. The CPI is crucial as it supports the possibility of the Federal Reserve easing interest rates later this year. The CME FedWatch Tool indicates that the market predicts the Federal Reserve will likely maintain the current interest rates for the time being. However, over 52% of traders anticipate at least one rate cut by September, expressing confidence in an easing.
Such an easing would potentially stimulate the economy, allowing volume to flow into assets like Bitcoin and encouraging investors to increase their positions. Thielen believes that in anticipation of the June CPI results, spot Bitcoin exchange-traded funds (ETF) inflows will remain strong. This prediction has already proven true, as multiple Bitcoin ETFs have experienced significant inflows, breaking the trend of consistent low flows seen in recent weeks.
According to Farside data, inflows have been consistently positive since May 13, reaching a peak of $305.7 million on May 21. Thielen also noted that when spot Bitcoin ETFs were launched on January 11, despite attracting $611 million in inflows on the first day, the rest of January’s inflows were disappointing. He attributed this to the CPI results printing higher than expected, with a reading of 3.4% instead of the anticipated 3.2% and higher than the previous month’s 3.1%.
“It is no coincidence that Bitcoin was weak in January and stronger into March but consolidated for two months,” Thielen remarked. This observation highlights the correlation between CPI results and Bitcoin’s performance during that period.
In conclusion, investors and Bitcoin enthusiasts eagerly await the June CPI results as they hold the key to a potential new all-time high for Bitcoin. Thielen’s analysis suggests that a CPI reading of ‘3.3% or lower’ is crucial for Bitcoin’s upward momentum. If the results align with these expectations, it could pave the way for increased confidence and investment in Bitcoin, particularly through spot Bitcoin ETFs.