Bitcoin Price Surges After CPI Inflation Report: Why the Data Matters for Crypto

Bitcoin's price has surged following the release of the Consumer Price Index (CPI) inflation report, highlighting the significance of this economic indicator for the cryptocurrency market. The CPI data, released on January 11, 2025, showed higher-than-expected inflation figures, driving U.S. stocks down and boosting cryptocurrency markets, with Bitcoin retesting the $49,000 area for the first time since May 2022.



The U.S. Bureau of Labor Statistics released the U.S. Consumer Price Index (CPI) report on January 11, showing a 0.3% increase for December 2023. The year-over-year perspective showed a 3.4% climb in the all-items index, a notable increase compared to the 3.1% in the previous year. More importantly, the actual figure read 306.746, marginally higher than the expected inflation rate of 306.61. This higher-than-expected inflation figure often triggers bullish price movements in non-cyclical risk assets like Bitcoin.



The chart above captures the initial Bitcoin price reaction to CPI data compared to the S&P 500, the flagship stock markets index. S&P 500 slid 1% to 4,777.94, while BTC prices moved as high as $48,890 on January 11, up 10% within 24 hours. This negative divergence affirms the outlook that this higher-than-expected inflation data could increase the appeal of BTC to investors.

Bitcoin investors place early bets on potential rate cuts

Looking beyond the price charts, the instant reaction among Bitcoin institutional investors is another vital factor that affirms this bullish CPI narrative for BTC price. Santiment's supply by address metric tracks corporate entities' Bitcoin holdings by aggregating balances held in wallets with at least $100,000 worth of BTC. Bitcoin's largest whale investor cohort—wallets with 1,000 to 1 million BTC—held a total balance of 2.97 million BTC at close on January 10. However, following the higher-than-expected inflation data, the whales rapidly increased their balances to 2.98 million BTC.



This movement reaffirms that institutional investors could increase exposure to Bitcoin in an early bid to front-run gains from potential rate cuts. Corporate investors are highly influential in any cryptocurrency ecosystem. Hence, there's a chance that strategic retail investors and speculative traders could mirror the whales' stance and take on bullish positions as well.

In summary, the timing of the CPI data release, less than 24 hours after the much-anticipated spot ETF approval, appears to have intensified the bullish pressure on Bitcoin price. Positive CPI data impact could push Bitcoin price to $50,000 in the days ahead. However, the $47,590 resistance is the main obstacle for the bulls to actualize this target. IntoTheBlock's in/out of the money around price data shows key resistance and support levels by grouping current holders according to their historical entry points. As depicted below, 882,400 addresses had acquired 563,740 BTC at an average price of $47,593. BTC could continue consolidating just above the $45,000 area if these major clusters of investors keep booking profits. But if the bulls can orchestrate a decisive breakout above the $47,600 resistance, the $50,000 retest could be on the cards.

Bitcoin (BTC) price Forecast on CPI Data, Jan 2024 | Source: IntoTheBlock