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.
JP MORGAN HAS SHARED 6 POSSIBLE SCENARIOS HERE ARE ALL OF THEM.
THE MOST LIKELY AND EXPECTED OUTCOME IS Y/Y CPI COMING IN BETWEEN 7.2% AND 7.4% pic.twitter.com/speetTM55h
— GURGAVIN (@gurgavin) December 12, 2022
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.
At press time, BTC investors seemingly remained on the sideline, awaiting the CPI announcement. BTC stood at $17,168.
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).
Related Reading: Bitcoin Drops Below $17,000 Pre-CPI And FOMC – Scenarios To Prepare For This Week
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.
Related Reading: Upcoming FOMC Meeting Is The Most Important Ever For Bitcoin – Watch Out For The Dot Plot
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 price, 4-hour chart. Source: TradingView
At press time, BTC investors seemingly remained on the sideline, awaiting the CPI announcement. BTC stood at $17,168.
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