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Bitcoin Price Breaks Above $18,200 – CPI Data Comes In Better Than Expected

The first of two key events in a historic week for Bitcoin and financial markets worldwide is in the books.

While the CPI release was today at 8:30 ET, the last FOMC meeting of the year is scheduled to take place tomorrow featuring a new dot plot. CPI and FOMC coincide this week for the first time in a while, making it blockbuster week for Bitcoin.

And drum roll! The Bureau of Labor Statistics released the November figures for the Consumer Price Index (CPI) and Core CPI a few minutes ago.

The expectation for CPI was 7.3% CPI (0.3% MoM), up from 7.7% (0.4% MoM) in October. Core CPI was expected at 6.1% (0.3% MoM), and was 6.3% (0.3% MoM) the previous month.

The new numbers for November read as follows: CPI fell 0.6% and was 7.1% in November. Thus, the CPI comes in 0.2% better than expected.

Core CPI was 6.0 % in November, falling by 0.3% from the previous month. Compared to the prediction, Core CPI is 0.1% below expectation.

Already in the run-up to the print, the bulls pushed the Bitcoin price up in anticipation of positive data. The price stood at around $17,550 before the announcement.

After the release, the price reacted extremely bullish to the news along with the S&P 500. The latter is currently breaking out of a year-long downtrend.

At press time, BTC was up almost 6% within the last 24 hours and was trading at $17,907. With a local high of $18,209, the price was rejected at the 2-month high of November 11 for the moment being.

Bitcoin BTC USD 2022-12-13

What Will The Federal Reserve Do With The Data?

Prior to the CPI data release, the market was forecasting a rate hike of 50 bps with a 72% probability, according to the CME FedWatch tool. This is compared to a 28% probability of a 75 bps hike.

Within the next few hours, it remains to be seen how this rate will shift due to the CPI print. At press time, however, the probability of a 50 basis point jumped significantly to 79.4%, according to the CME FedWatch tool.

Today’s CPI print has thus further increased the probability for 50 bps tomorrow.

As NewsBTC reported, JP Morgan published an analysis before releasing the CPI data, according to which it gave the highest probability (50%) of a CPI print of 7.2% to 7.4%. As it turns out, JP Morgan was almost spot on with this assessment.

JP Morgan assigned only a 15% chance to the 7.1% outcome and predicted that this could mean increases of 4% to 5% for the S&P 500.

Goldman Sachs forecasts that today’s CPI print could mean a 2% to 3% increase for the S&P 500.

However, ultimately the FED will decide tomorrow what to do with the CPI data. As NewsBTC reported, it will also publish the dot plot, which reflects the central bank’s long-term expectations and outlook.

So whether the rally will find a continuation or abruptly stop will depend on whether the FED plays along.

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JPMorgan Says S&P 500 Can Soar Over 10% Today – Will Bitcoin Follow?

Today and tomorrow are probably the most important days of the year for the Bitcoin and crypto market. Today’s release of the Consumer Price Index (CPI) will possibly be the key for the coming weeks and months.

At 8:30 ET, the CPI for November will be released. Tomorrow, Wednesday at 2:00 PM ET, the Federal Open Market Committee (FOMC) will announce its interest rate decision for December.

Following that, Federal Reserve Chairman Jerome Powell will address the press at 2:30 p.m. and provide the rationale for the decision and the updated forecast for inflation and interest rates (dot plot).

If CPI comes in better than expected today, there will likely be a rally for risk assets like Bitcoin. If the CPI falls short of expectations or even rises, it could mean a rude awakening for BTC investors – at least this seems to be the market consensus.

Expectations for today’s CPI are 0.4% lower than the previous month, when it came in at 7.7%. As a result, the projected CPI is at 7.3%.

JPMorgan Draws Possible Scenarios

Meanwhile, banking giant JPMorgan published an analysis that CPI inflation below 6.9% could trigger a massive rally in traditional trading markets.

Given Bitcoin’s correlation with USD markets and the S&P 500 in particular, this could likely have a beneficial impact on the BCT price. In total, JPMorgan has mentioned six possible scenarios.

The most likely and expected outcome with a 50% chance is a Y/Y CPI between 7.2% and 7.4%. This would lead to a modest rally in the traditional markets, according to JPMorgan, and would likely have a positive impact on the Bitcoin and crypto markets.

However, as the market heavily hinges on expectations, it remains to be seen whether the majority of market participants have not already priced this in.

As the second most likely scenario with a probability of 25%, JPMorgan considers a CPI between 7.5% and 7.7%, which would mean only a slight drop or stagnation of inflation.

According to the banking giant, this would cause the S&P 500 to plummet massively, by 2.5% to 3.5%.

The Bullish Scenarios For Bitcoin

Furthermore, JPMorgan assigns a 15% probability to the bullish scenario of CPI landing at 7.0% to 7.2%, which could mean a 4% to 5% rally for the S&P 500.

The banking giant gives the most bullish scenario, a CPI of 6.9% or below, only a 5% chance. But then the S&P 500 could see a legendary rally of 8% to 10%. As Bitcoin is the higher beta, this could mean double-digit gains for Bitcoin.

Bitcoin BTC USD 2022-12-13

At press time, BTC investors seemingly remained on the sideline, awaiting the CPI announcement. BTC stood at $17,168.