Bitcoin hugs $29.5K into CPI as odds split over new US inflation spike

Bitcoin (BTC) hovered near $29,500 on Aug. 10 as markets braced for a fresh United States Consumer Price Index (CPI) print.

Trader warns of Bitcoin "downside" despite CPI volatility

Data from Cointelegraph Markets Pro and TradingView showed BTC price action stabilizing in the run-up to the CPI release — itself a classic volatility catalyst.

CPI is one of the key elements for the Federal Reserve when deciding interest rate policy. Last month’s June readout was the lowest in two years, with expectations broadly pointing to another drop for July.

“3.3% are the expectations, but are we going to get it and what will the markets do?” Michaël van de Poppe, founder and CEO of trading firm Eight, queried in part of an X post on the topic.

Van de Poppe noted that there appeared to be a chance that CPI could rise, something which would pressure risk assets, including crypto, which favor looser Fed policy.

JPMorgan Chase was among those warning of a re-acceleration in CPI values.

“The major uncertainties concern two issues that were previously seen as unlikely to undermine the July numbers: The direct and indirect price pass-throughs of the recent increase in energy and food prices; and The relative stubbornness of service inflation,” economist Mohamed El-Erian explained in part of the day’s analysis.

“With CPI today, i think Bitcoins and Crypto are going to give us some fun & games, but ultimately, I'm slightly biased to more downside,” popular trader Mark Cullen told X followers.

“With BTC reentering the range & failing to hold 29.5k yesterday, if it can't immediately get back above & hold, i will compound my short.”

Nonetheless, market expectations regarding rate hikes themselves favored a pause at the next Federal Open Market Committee (FOMC) meeting in September.

According to CME Group’s FedWatch Tool, the odds of that pause were above 85% at the time of writing.

Major BTC buyer support below $29,000

Monitoring resource Material Indicators meanwhile presented liquidity conditions on the Binance BTC/USD order book.

Related: Bitcoin risks 15% dip by October, but $100K is due in 2026 — Analysis

These revealed the potential for snap downside thanks to a lack of bid support immediately below current spot price.

“Not speculating on what the CPI and Jobs Reports are going to look like in the morning. At 8:30am ET, we'll know how those numbers will impact the soft landing narrative and the Sept FED rate hike decision. What matters between now and then is where liquidity is stacked and where it's thin,” part of accompanying commentary read.

“Price can move quickly through the dark, illiquid zones because there is little or no friction. To the contrary, the more liquidity there is around buy/sell walls, the more insulated those levels are.”

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.