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Analaysts believe that the lower-than-expected US inflation data could fuel optimism among Bitcoin traders before the much anticipated Fed rate cut scheduled next week.
Key Notes
Analysts are predicting a lower-than-expected CPI data for August which could be a fuel for the BTC price rally aheadSwyftx lead analyst Pav Hundal highlighted that short sellers are at risk of a classic short squeeze if investor confidence remains highHowever, there are rising concerns around the Yen carry trade unwinding, following the Yen's surge to 140.7 against the US Dollar.Crypto traders are closely awaiting the release of the US Consumer Price Index (CPI) scheduled for Wednesday, as Bitcoin BTC $56 431 24h volatility: -1.0% Market cap: $1.11 T Vol. 24h: $31.03 B price holds at $56,700 levels before making any further move. The crypto analyst believes that the lower-than-expected US inflation data could fuel optimism among Bitcoin traders before the much anticipated Fed rate cut scheduled next week. If the BTC price returns to $60,000 levels, $1.6 billion in short liquidations will happen, per the data from CoinGlass.
Swyftx lead analyst Pav Hundal recently added that “Short sellers are at risk of getting burned, and we could see a classic short squeeze ignite a rally”. Speaking to Cointelegraph, he further stated that the “investor confidence remains high” while adding that the year-on-year Consumer Price Index (CPI) is unlikely to surprise on the upside due to its calculation method.
He also stated that if the August CPI numbers come to be lower than expected, many investors will start expecting a larger rate cut next week. The chances of the Fed rate cuts are very high with 75% expectations of a 25 bps rate cut and 25% of a 50 bps rate cut coming from the US central bank.
On Sept. 4, Federal Reserve Chair Jerome Powell reinforced this expectation, stating that “the time has come”. This came after July’s Consumer Price Index (CPI) report showed a 0.2% increase, following a 0.1% decline in June, according to data from the US Bureau of Statistics.
However, Hundl also stated that higher inflation would be a major surprise and could thus trigger a BTC sell-off. “But the unimaginable keeps happening and if it does, you’d expect to see very heavy selling of risk assets,” he said.
Will the Yen Carry Trade Unwinding Hurt BTC Price Recovery?
Earlier today, the Japanese Yen made strong progress against the US Dollar with the JPY/USD pair surging to 140.7, the highest since the beginning of the year. This has raised concerns of yet another unwinding of the Yen carry trade similar to what we saw on August 5 last month.
$USDJPY breaking down, it's about to be goblin town all over again in markets as it approaches 140. Let's see if $BTC can hold up. pic.twitter.com/Uap3Kry55d
— Arthur Hayes (@CryptoHayes) September 11, 2024
This might trigger another sell-off in risk-ON assets such as equities and Bitcoin. BitMEX CEO Arthur Hayes has flashed the possibility of yet another Yen carry trade unwinding.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
