BTC Price Tests $17K in PPI as Bitcoin Analysts Eye CPI, FOMC Catalysts

bitcoin (BTC) fell at the Wall Street open on December 9 as US economic data appeared to disappoint markets.

BTC/USD 1 hour candlestick chart (Bitstamp). Source: TradingView

The focus is on the “big trigger” of Bitcoin vs. CPI

Data of Cointelegraph Pro Markets Y TradingView showed BTC/USD falling to approach $17,000 after passing the level overnight.

The pair reacted poorly to US Producer Price Index (PPI) data, which despite being above expectations still beat the previous month’s reading.

“A bit of an overreaction towards PPI, which has been falling significantly since last month, but less than expected,” Michaël van de Poppe, founder and CEO of trading company Eight, answered.

Van de Poppe, like others, signaled that the crux of the macro signals would come next week in the form of the consumer price index (CPI) for November.

“Next week’s CPI is the big trigger, just like it was earlier this month,” he added.

CPI could be a pivotal point, trading firm QCP Capital continued, as if to continue its downward trend, markets may have even stronger conviction on lower inflation as we ring in the new year.

Days later, the Federal Reserve’s Federal Open Market Committee (FOMC) meeting, where policymakers decide on interest rate hikes, should add fuel to the fire.

“Tuesday’s CPI will once again be ‘the most important CPI release ever’, this time as the market has primed it for its epic 2-month rally,” QCP wrote in a market update for the day.

“At the FOMC, Fed members will publish their updated inflation and interest rate projections. Markets will focus on where they forecast inflation next year, as well as where they see rates in 2023 and 2024. Both events are the last remaining hurdles to a year-end rally.”

Analysts acknowledged that if the CPI were to disappoint, it would potentially “invalidate” the rally in stocks thus far. A 50 basis point rate hike had a 77% chance of happening, according to CME Group. FedWatch Tool.

Fed target rate probability chart. Source: CME Group

US dollar takes a break

US stocks were unchanged after the first hour of trading, with PPI failing to make a significant dent in performance.

Related: GBTC’s ‘elevator to hell’ pushes Bitcoin spot price closer to 100% premium

For macro economist and stock analyst James Choi, this was to be expected, given that the Fed was already considering slowing down its rate hikes.

“The Fed has already changed its course. Today’s PPI will not affect Powell’s plan. Next week it’s at 50bp, so that’s it,” he said. forecastand also said his calculations predicted a “much, much lower” CPI reading than many believed.

Meanwhile, US dollar strength simmered as well, with the US Dollar Index (DXY) trying to make up for the previous day. lost ground on the back of PPI.

US Dollar Index (DXY) 1 hour candlestick chart. Source: TradingView

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