Bitcoin Price Eyes CPI Data: Will Inflation Trigger its Next Breakout or Breakdown?

Bitcoin initially fell more than 3.5% this week, retreating from $114,000 to the $107,000 range as traders turned cautious ahead of the October 24 U.S. Consumer Price Index (CPI) release. Meanwhile, it reversed the loss with a 1.6% uptick in the past day, trading at $109,879.

The CPI report, delayed by the government shutdown, has taken on outsized importance as the Federal Reserve prepares for its next policy meeting on October 29.

Economists headline inflation to rise 3.1% year-over-year, slightly higher than August’s 2.9%. Core CPI, which excludes food and energy, is expected to remain unchanged, signaling a gradual cooling trend.

However, with inflation climbing for six consecutive months, market participants worry that another upside surprise could renew volatility across equities and cryptocurrencies.

Whether Bitcoin breaks higher or lower will largely depend on the CPI outcome and the Federal Reserve’s reaction at its October 29 meeting. A softer inflation reading could encourage risk-taking and push Bitcoin back toward the $117,000–$120,000 range, while a hotter print could fuel another selloff toward $100,000.

Analysts say the CPI holds unusual importance this month because it’s the only major inflation gauge available before the Fed’s policy meeting. to the CME FedWatch Tool, futures markets show a 96% probability of a rate cut in October and an 85% chance of another in December.

Historically, rate cuts have boosted Bitcoin’s performance. After the September 2024 cut, BTC gained 6.6% in a week, while the November cut saw a 32% monthly surge. Analysts suggest that a lower-than-expected CPI reading could spark a similar response.

Notably, Gold extended its decline this week, 8% in two days and erasing nearly $2.5 trillion in market capitalization, its largest drop since 2013. The decline has led some analysts to anticipate a shift in capital flows toward digital assets.

Asset manager Bitwise that a modest 3–4% rotation from gold into Bitcoin could push BTC above $242,000. Historical patterns support this argument, as Bitcoin often accelerates following periods of weakness in precious metals.

Data from CryptoQuant Bitcoin’s resilience with daily spot trading volume on Binance nearly doubling since early October, rising from an average of $3–5 billion to $5–10 billion. The surge in trading activity reflects heightened investor interest and could help build a base for a more sustainable Bitcoin recovery once macro uncertainty eases.

At the same time, the Bitcoin NVT an on-chain valuation metric, indicates that the bull cycle may not be over, despite short-term price corrections.

Dean Chen, an analyst at digital asset firm Bitunix, market reactions will hinge on Treasury yield and dollar movements after the CPI release. “If both rise, Bitcoin could face pressure. If both decline, risk appetite may return,” Chen said.

Chen added that a cooler inflation reading could reignite ETF inflows and lift Bitcoin toward the $117,000–$120,000 range. However, a stronger CPI result might drive capital back into safe havens, testing BTC’s support near $100,000.