Inflation marks just the start of some key macro decisions that could keep Bitcoin down for months, warnings indicate.
Bitcoin (BTC) recovered above $48,000 on Dec. 10 after another fall took BTC/USD to lows of $47,350 overnight.
Data from Cointelegraph Markets Pro and TradingViewÂ showed the pair orbiting $48,300 at the time of writing as markets braced for Novemberâ€™s Consumer Price Index (CPI) readout.
As Cointelegraph reported, economists tip this monthâ€™s year-on-year inflation data to beat October at 6.7%.
While last monthâ€™s shock CPI news fuelled an uptick across Bitcoin and crypto assets, caution among analysts prevailed ahead of Fridayâ€™s figures.
â€œAt this point I think the CPI data is moot. Markets have priced it in unless itâ€™s to the extreme end,â€ popular trader Pentoshi argued on Twitter.
He added that the â€œrealâ€ potential market mover from the macro side should be next week when the United States Federal Reserveâ€™sÂ Federal Open Market Committee gives indications over the central bankâ€™s asset purchase taper policy.
Increasing the rate of tapering â€” decreasing asset purchases â€” would pressure risk assets, commentators say, leading to reduced performance for Bitcoin. For Arthur Hayes, former CEO of derivatives platform BitMEX, this would only reverse once the Fed returns to â€œbusiness as usual.â€
â€œFor those who are deciding whether to allocate more fiat into crypto, it pays to wait. I donâ€™t see money getting any free-er or easier. Therefore, it pays to sit on the sidelines until the dust settles after a March 2022 or June 2022 Fed rate hike,â€ he wrote in his latestÂ blog postÂ on Thursday.
â€œWatch out for a puke fest in risk asset prices should the Fed hike, followed by a quick resumption of zero interest rate policy and aggressive bond purchases. When the Fed signals a return to business as usual, then itâ€™s time to back up the truck.â€
â€œBottoms take timeâ€
Such a prognosis ties in with existing medium-term forecasts for Bitcoin putting its cycle top further on in 2022 â€” not this month, as previously slated.
â€œBottoms take time. Unfortunately, they do. And weâ€™re getting close to it with Bitcoin,â€ he advised Twitter followers.
â€œAfter that, weâ€™ll get another big cycle in 2022. All good.â€
He added that compared to 2017, the last post-halving bull run year, Bitcoin was â€œprobablyâ€ more toward the beginning of its peak phase than the end of it.
Meanwhile, separate data, which has shown Bitcoin copying price action from 2017 almost to the day, faces a key test this month.