Crypto analyst Pav Hundal suggested that Bitcoin sellers could face rough times if CPI numbers are released as expected. Hundal mentioned that the market has high investor confidence but cautioned that Bitcoin bears could dominate if the CPI prints higher-than-expected figures.

Lead analyst at Swyftx Pav Hundal suggested that the Year-on-Year (YoY) Consumer Price Index CPI numbers could trigger a volatile environment for crypto traders. 

According to Hundal, the crypto market has high investor confidence, which could be reinforced by low CPI numbers ahead of a Bitcoin rally.

Low CPI numbers could initiate anticipation of a larger rate cut

The consumer price index data tracks inflation rates for the US economy. According to the analyst, low CPI numbers could initiate anticipation for a larger rate cut later in the month.

Looming clouds of foretold September rate cuts have been gathering for months. The rate-cut expectations were fueled by dovish comments by US Federal Reserve Chair Jerome Powell in August, who said: “The time has come.”

According to data from the US Bureau of Labor Statistics, July’s Consumer Price Index increased by 0.2% from a 0.1% decline recorded in June.

Historically, investors view risk-on assets like Bitcoin as more attractive when interest rates are cut. On the other hand, traditional assets like bonds and term deposits become less appealing to investors.

Higher than-expected CPI could trigger BTC bears

Hundal also gave his perspective on the scenario where the inflation rates increase contrary to what the market expects.

According to Hundal, higher-than-expected inflation numbers could surprise investors. As a result, “perceived” riskier assets like Bitcoin could become less attractive to investors, triggering a sell-off.

“But the unimaginable keeps happening, and if it does, you’d expect to see very heavy selling of risk assets.”

-Pav Hundal

Bitcoin is trading at $56,571 at the time of this publication, having shed off 0.55% in the last seven days and 1.34% in the last 24 hours, according to raw data from the crypto price tracking website Coinmarketcap.

Data from futures market analysis platform CoinGlass shows that Bitcoin’s imminent recovery to $60,000 could cause a $1.6 billion liquidation on short positions.

Source: CoinGlass

Hundal also highlighted that the Bitcoin market is stuck in indecision, as investors are not sure what to expect. He cited the $1.3 billion increase in Bitcoin open interest seen since September 7th, which has split the market on where the price is headed.

Crypto enthusiasts and Bitcoin Maxi AlphaBTC noted that the market was anticipating good numbers on the Consumer Price Index, Producer Price Index (PPI), and job data. AlphaBTC referenced the projections for the spike in inflows witnessed on spot Bitcoin exchange-traded funds (ETFs) on September 10th. On this day, spot Bitcoin ETFs recorded the highest cumulative net inflows since August 26th, worth $117 million, according to Bitcoin ETF flow tracker Farside.