Here's how analysts see U.S. inflation influencing bitcoin

U.S. inflation is due at 8:30 a.m. ET. Economists surveyed by Dow Jones estimated September’s consumer price index rose 0.6% month-on-month and 3.6% year-on-year. Core CPI, which excludes volatile food and energy prices, is forecast to increase 0.2% from August and 2.5% annually.

The numbers are widely watched for cues on how the Federal Reserve might respond with interest rates. For bitcoin, the focus will be less on the headline number alone and more on how the report reshapes Fed interest-rate policy expectations.

Here’s how analysts see the report impacting bitcoin.

Ryan Lee, chief analyst, Bitget Research

“A hotter-than-expected inflation print could trigger another round of liquidations as Treasury yields and Fed expectations adjust.”

Lee said a recent selloff has reduced leverage in bitcoin, but may not have fully cleared the market’s riskier bets. In other words, traders may still be carrying substantial leveraged positions, which makes bitcoin vulnerable to another cascade of forced selling if yields rise and rate-cut expectations retreat.

Utkarsh Ahuja, founder and managing partner, Moon Pursuit Capital

“Higher inflation can keep Treasury yields elevated, support the dollar and increase the cost of capital, all of which create challenges for crypto and growth-oriented investments.”

Ahuja said investors should be cautious about assuming the Federal Reserve can ease policy as quickly as markets would like. He will watch the underlying inflation figures alongside the bond market’s reaction, noting that a softer reading could support a recovery in risk appetite.