Bitcoin Holds Support Ahead of U.S. CPI Data

Bitcoin closed Sunday at about $83,700 on Bitstamp, recording a 3.2% weekly decline. The close kept the $82,500 support level intact and kept BTC/USD above its previous $60,000-to-$80,000 trading range.

The U.S. Consumer Price Index for September is scheduled for release Wednesday, Oct. 14, followed by the Producer Price Index on Thursday, Oct. 15. Annual CPI inflation is forecast at 3.7%, up from 3.4% in August. Monthly PPI inflation is expected at 0.3%, compared with 0.2% in August.

Lower-than-expected inflation could reduce expectations for additional Federal Reserve interest-rate increases and ease pressure from real yields. Tim Waterer, chief market analyst at KCM Trade, described a cooler CPI or PPI reading as the clearest short-term catalyst for risk assets. “It would reduce the odds of further Fed tightening and ease pressure on real yields,” he said.

Market pricing indicates an 18.8% probability of a 25-basis-point rate increase at the Federal Open Market Committee meeting on Oct. 28. The probability of a quarter-point increase at the following meeting in December is 70.6%. The federal funds target range is currently 3.75% to 4%.

Fed Chair Kevin Warsh is scheduled to discuss the global economy with International Monetary Fund Managing Director Kristalina Georgieva at an event in Bangkok on Friday.

U.S. Treasury yields fell from 24-year highs recorded last week. The 10-year yield stood at 5.24% on Monday, while the 30-year yield was 5.60%. S&P 500 futures rose 0.25%, leaving the index about 30 points below its latest record high.

Oil prices also remained in focus after President Donald Trump announced plans to purchase 300,000 metric tons of diesel from Russia. Trump also announced an “energy ceasefire” between Russia and Ukraine. Ukrainian President Volodymyr Zelenskyy said he was unaware of such an agreement.

West Texas Intermediate crude traded near $91.50 a barrel on Monday, about 2% above its session low of $89.60. Tamas Varga, an analyst at PVM, described the effect of the diesel plan as uncertain because Russia’s lower production capacity could limit available supplies.

Russia has partly lifted its diesel export ban, allowing about 500,000 metric tons, or roughly 3.7 million barrels, onto the international market. The volume equals about one day of U.S. consumption and 13% of global demand. The average U.S. diesel price was $6.26 a gallon, compared with the record of $6.52 set Sept. 22.

Bitcoin has tested the $82,500 level several times since breaking above it in July. Trader Rekt Capital described the weekly close above the level as a successful support retest. Analyst Aksel Kibar compared Bitcoin’s pattern with the S&P 500, which has retested several support levels since May.