Crypto traders have been struggling to navigate the market over the past 24 hours as Bitcoin’s price fluctuated dramatically between $86,000 and $90,000.
Anticipation is building for later Thursday when important U.S. inflation data for November is set to be released. This report will provide insights into economic price pressures after the recent government shutdown resulted in the cancellation of October’s data, leaving the Federal Reserve without key information.
What the data might indicate
Estimations suggest that the headline consumer price index (CPI) rose to 3.1% year-over-year in November, from 3% in October, based on consensus estimates from FactSet. Excluding volatile food and energy prices, core inflation is also predicted to be at 3.1%.
This figure is still one percentage point above the Fed’s 2% target, which may influence some Fed officials to temper expectations surrounding interest rate reductions. As it stands, markets expect at least two 25-basis-point cuts from the Fed in the upcoming year.
Expert perspective
“This upcoming release is much awaited, particularly because the disruptions from the government shutdown have left the Federal Reserve and the market with limited visibility. Given that the October report was canceled, this will be the first detailed insight into price changes in several weeks,” Dr. Mohamed A. El-Erian, President of Queens’ College at Cambridge University and part-time Chief Economic Advisor at Allianz, remarked on X.
He noted that analysts will be focusing on two aspects: whether the disinflation trend in services has sustainable momentum, and the residual effects of tariff-driven price increases in goods inflation.
Why Bitcoin may respond
If the inflation data confirms a disinflation trend, it could lead markets to factor in additional rate cuts for 2026, invigorating risk appetite in financial markets. However, it’s worth mentioning that BTC did not exhibit a sustained bullish response to the recent job data released on Tuesday, which indicated a jobless rate at its highest since September 2021.
Additionally, the 10-year Treasury yield has remained stubbornly above 4% in recent months, even amid Fed easing. This is partly attributed to uncertainty surrounding inflation, as CPI has gradually increased from 2.3% in May to 3% in October.
Yields on longer-duration securities like the 10-year reflect investor expectations regarding inflation trends, economic growth, and Fed policy implications. Rising yields typically signal stronger expectations in these areas, making fixed-income investments more attractive and diminishing the allure of riskier assets.
In light of this context, a hotter-than-anticipated inflation report could further drive yields up, posing challenges for BTC supporters.
Challenges in the crypto market
It’s also important to note that specific challenges in the crypto space are not helping the situation. For example, MSCI’s review of digital asset treasuries could present a significant obstacle.
“MSCI is evaluating the index eligibility of digital-asset treasury firms, potentially leading to exclusions for companies with over 50% exposure to crypto. If implemented, passive outflows could total up to USD 2.8 billion, putting additional strain on an already vulnerable market,” according to the market insights team at QCP Capital, based in Singapore.
