Crypto traders have struggled to understand the market over the past 24 hours. the price fluctuated wildly between $86,000 and $90,000.
Things could get more exciting later on Thursday with the release of key US inflation data for November. That will provide a fresh look at price pressures in the economy after the record government shutdown wiped out October data and left the Federal Reserve in the dark.
What the data could show
The data is expected to show that the overall consumer price index (CPI) rose to 3.1% on an annual basis in November, up from 3% in October, according to FactSet consensus estimates. Core inflation, which excludes volatility in food and energy prices, is expected to be 3.1%.
That’s still a point above the Fed’s 2% target, which could encourage Fed hawks to lower their expectations for interest rate cuts. As of this writing, markets are pricing in at least two Fed rate cuts of 25 basis points next year.
Expert perspective
“This release is highly anticipated, in large part because recent data disruptions related to the government shutdown have left the Federal Reserve (and the market as a whole) partially blind. With the cancellation of the October report, this is the first comprehensive look at price action in weeks,” Dr. Mohamed A. El-Erian, president of Queens’ College at the University of Cambridge and part-time chief economic advisor at Allianz and president of Gramercy Fund Management, said on X.
He added that markets will be looking for two things: whether the disinflation trend in services has stronger legs and what remains of the tariff-driven prices trickles down to good inflation.
Why Bitcoin Might React
If the data confirms disinflation, this could prompt markets to price in additional rate cuts for 2026, thereby galvanizing risk-taking in financial markets. Note, however, that BTC did not show a sustained bullish reaction to the employment data released on Tuesday, which showed the unemployment rate at the highest since September 2021.
Additionally, the 10-year Treasury yield has remained above 4% in recent months despite the Fed’s easing. This is partly due to uncertainty over inflation, as the CPI has risen steadily from 2.3% in May to 3% in October.
Longer duration yields, like the 10-year, incorporate investors’ bets on inflation trends, economic growth and the Fed’s policy directions. Higher yields signal higher expectations in these areas and increase the attractiveness of fixed income instruments, thereby reducing the appeal of risky assets.
Against this backdrop, a higher-than-expected inflation report could further increase yields, complicating the situation for BTC bulls.
Cryptographic Challenges
Note that crypto-specific factors don’t help either. For example, MSCI’s review of digital asset treasuries poses a major hurdle.
“MSCI is reviewing digital asset treasury company index eligibility, with potential exclusions for companies with more than 50% exposure to cryptocurrencies. If adopted, passive outflows could reach up to $2.8 billion, adding pressure to an already fragile market,” said Singapore-based QCP Capital’s market analysis team.
