Bitcoin’s valuation appears to be influenced by fluctuations in inflation figures – specifically the Consumer Price Index (CIP) – compared to prior months, based on a market analysis released on May 29 by Markus Thielen, an analyst with 10x Research.
Thielen pointed out that when CPI figures exceed expectations, this generally results in a negative impact on Bitcoin’s value, whereas lower-than-anticipated CPI figures tend to be favorable for the digital currency.
Bitcoin’s Relationship with Inflation Data
In line with the unveiling of CPI numbers, inflows to spot Bitcoin Exchange-Traded Funds (ETFs) have also shown a correlation, often increasing or resuming when the revealed inflation is lower than the preceding month’s data.
The study compared Bitcoin’s value over the half-year to released U.S. inflation figures, indicating a pattern where Bitcoin tends to falter when CPI rises and gains strength when CPI falls below expectations.
Projections point towards continued momentum in Bitcoin ETF inflows leading up to the upcoming CPI report on June 12. This could set the stage for Bitcoin to reach unprecedented valuation peaks.
A moderate dip is anticipated in the pricing model as consensus braces for a potentially disappointing high inflation announcement for May 15. Over the following two months, the forecast hints at inflation stabilizing or slightly declining.
The analysis proposes that inflation fears could wane and even become advantageous for Bitcoin’s performance as summer unfolds. For April, the U.S. inflation, as measured by CPI, stood at 3.4%.
Moreover, the release of core personal consumption expenditures (PCE) price index data, which is also a gauge of inflation favored by the Federal Reserve, is expected on May 31.
Forecast for Bitcoin’s Value
As of currently, Bitcoin trades down by 1% for the day, priced roughly at $68,000. It suffered a temporary dip to a low of $67,122 but has since seen some recovery in the Thursday morning Asian market hours.
Bitcoin’s performance has been quite steady in the past two weeks, with a 7.7% drop from its mid-March peak as it continues to consolidate.
Today, the broader altcoin market is experiencing greater declines, with a 1.3% decrease bringing the entire market capitalization to $2.68 trillion.
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