Bitcoin News Today: CPI at 3%: Crypto's Gamble on Fed Easing Hopes

The U.S. Consumer Price Index (CPI) report, delayed by the ongoing government shutdown, is set to shape the crypto market's near-term trajectory as traders brace for its release. With $6 billion in Bitcoin and Ethereum options set to expire, according to Coinpedia, the data could trigger significant volatility in the digital asset space. The September CPI, expected to show a 0.4% monthly increase and 3.1% annual inflation, is critical for gauging the Federal Reserve's policy path and liquidity flows into risk assets like crypto.

Analysts have outlined three potential scenarios based on the CPI outcome. A reading above 3.1%—the highest inflation since June 2024—would likely be bearish for Bitcoin and Ethereum. Higher inflation could pressure the Fed to maintain or even raise interest rates, reducing liquidity and making risk-on assets less attractive. Conversely, a CPI print below 3.1% would signal easing inflation, increasing the likelihood of rate cuts and potentially sparking a crypto rally. A reading exactly at 3.1%, while meeting forecasts, could still prompt a hawkish Fed stance, limiting upside momentum.

The crypto market has already shown signs of anticipation. Bitcoin (BTC) and Ethereum (ETH) have seen mixed movements, with BTC trading near $108,720 and ETH slipping to $3,839 as of October 21, according to Crypto.news. On-chain metrics, however, suggest cautious optimism. The Crypto Fear & Greed Index improved to 27, and liquidations dropped 30% in the past 24 hours. Meanwhile, bearish skews in Bitcoin and Ethereum options indicate traders are shorting BTC while buying longer-term ETH calls, Coinpedia noted.

The CPI's impact on crypto is amplified by broader macroeconomic factors. A softer inflation print could catalyze a 25–50 basis-point rate cut by the Fed, unlocking liquidity and pushing BTC toward $113,000–$114,000, according to CCN. Fed Chair Jerome Powell has hinted at resuming quantitative easing (QE) once the government reopens, a move that historically correlates with crypto rallies. However, volatility remains high, with Bitcoin's 30-day volatility near 50%.

The actual CPI data, released on October 24, showed a 3% annual inflation rate—slightly below expectations—sparking a 1% surge in Bitcoin to $111,474, as reported by Yahoo Finance. This outcome strengthened the case for a 25-basis-point rate cut, with markets pricing in a 98.9% probability of such a move. The Fed's October 29–30 policy meeting will be pivotal, as the CPI data is the only major indicator available amid the government shutdown.

While the immediate outlook appears bullish, risks persist. Short-term holders remain under pressure, with analyst Ali Martinez warning that a BTC drop below key support levels could push prices toward $37,000, Coinpedia reported. Additionally, a hawkish Fed response to even a slightly hotter CPI reading could delay rate cuts and dampen risk appetite.

As the market digests the CPI data and awaits the Fed's next steps, the interplay between inflation, interest rates, and crypto liquidity will remain central to price action. With $6 billion in options expiring, traders are poised for a pivotal week that could redefine the crypto market's trajectory.