CPI Inflation of ‘3.3% or lower’ Holds the Key to Bitcoin’s New All-Time High: 10x Research
Harvey Hunter
Last updated: May 30, 2024 16:56 EDT | 2 min read
Markus Thielen, the Head Researcher at 10x Research and the analyst who accurately predicted the pre-halving Bitcoin all-time high, emphasized the significance of a June CPI reading of ‘3.3% or lower’ on May 30. He believes that this figure is crucial for Bitcoin to achieve a new all-time high.
In a research report by 10x Research, Thielen explained that while Bitcoin price movements may appear random, they are actually influenced by fundamental factors. He specifically highlighted inflation as the main driver and pointed out the importance of the US Bureau of Labor Statistics (BLS) releasing the CPI results on June 12.
Thielen stated that for Bitcoin to surpass its previous all-time highs reached in March, it needs to witness a slowdown in US inflation in the upcoming results. “If inflation prints 3.3% or lower, Bitcoin should make a new all-time high,” he stated. This represents a 0.1% decrease from the previous CPI result of 3.4% on May 15.
What will happen if lower CPI readings are not seen? Thielen believes that if the CPI reading is higher than expected, it could weaken Bitcoin’s momentum. Throughout this year, there have been instances where Bitcoin’s price declined following higher-than-expected CPI results.
For example, on April 10, the CPI was reported at 3.5%, just 0.1% higher than anticipated. Shortly after, Bitcoin experienced a significant decline, dropping 6.67% to $56,000 on April 30. In contrast, on May 15, Bitcoin surged more than 5% to $65,000 following a CPI decrease. The CPI dropped to 3.4%, just 0.1% lower than anticipated, which propelled Bitcoin’s price.
This demonstrates how even a slight increase in the CPI can negatively impact Bitcoin’s momentum. CPI is important because it supports the possibility that the Federal Reserve will be able to lower 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 now. Over 52% of traders expect at least one rate cut by September, expressing confidence in an easing.
This would stimulate the economy’s current sluggish state, allowing volume to flow into assets like Bitcoin and enabling investors to increase their positions.
Will this affect ETF inflows? Thielen believes that spot Bitcoin exchange-traded funds (ETFs) will continue to see strong inflows in anticipation of the release of the June CPI results. This prediction has already proven true, as multiple Bitcoin ETFs have experienced significant inflows, breaking the consistent low flows seen in recent weeks.
According to Farside data, inflows have been positive daily since May 13, peaking at $305.7 million on May 21. Thielen noted that when spot Bitcoin ETFs were launched on January 11, despite $611 million in inflows on the first day, the rest of January’s inflows were disappointing. He attributed this to the fact that the CPI results printed higher than expected at 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.
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