Crypto research firm 10x Research has released a new report stating that the key factor driving the trend of Bitcoin is the US Consumer Price Index (CPI) data. If the May CPI data, which will be released on June 12, shows a slowdown compared to the previous month, Bitcoin will be able to reach a new all-time high.
On May 15, the US Bureau of Labor Statistics (BLS) announced that the annual inflation rate for the Consumer Price Index (CPI) in April was 3.4%. The CPI data for May will be announced on June 12. 10x Research’s report suggests that Bitcoin can surpass the historical high it reached in March only if the CPI slows down compared to the previous month.
Markus Thielen, Chief Research Officer of 10x Research, stated that in the two weeks leading up to the announcement of the May CPI data, it is expected that the inflow of funds into Bitcoin spot ETFs will remain strong. However, if the CPI results are higher than expected, the momentum could weaken, as was the case earlier this year.
Since May 13, the Farside data has shown that the average daily inflow of funds into Bitcoin spot ETFs has been positive, reaching a record high of $305.7 million on May 21.
It is worth noting that 10x Research believes that the trend of Bitcoin is not subject to random fluctuations and that the key factor driving its trend is inflation. The price of Bitcoin will change direction based on whether the CPI data is higher or lower than the previous month. If the CPI is higher than the previous month, Bitcoin will decline, while if the CPI is lower than the previous month, Bitcoin will rise.
When the CPI data announced on January 11 showed an annual increase of 3.4%, higher than the expected 3.2% and the previous month’s record of 3.1%, Bitcoin declined and the trading volume of Bitcoin spot ETFs performed poorly. When the CPI data announced on February 13 showed an annual increase of 3.1%, lower than the expected 3.4%, indicating a slowdown in inflation, the inflow of funds into Bitcoin spot ETFs gradually recovered.
When the CPI data rose again to 3.2% on March 12, the inflow of funds into Bitcoin ETFs stopped. When the CPI data announced on April 10 reached 3.5%, exceeding the expected 3.4%, Bitcoin fell again. However, when the CPI data announced on May 15 reached the expected 3.4% and was lower than the previous month’s 3.5%, Bitcoin rebounded accordingly.
However, 10x Research speculates that inflation will gradually cease to be a problem and become a moderate driving factor for upward movement. As time progresses into the end of summer, it may become a strong driving factor because according to their model predictions, inflation will gradually decrease.
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