Inflation Data Releases Tonight! Can Bitcoin Break $120,000?

Will Bitcoin break through $120,000, or will it drop back to $100,000?" On October 24, this question lingered in the minds of every cryptocurrency trader.

As the U.S. Department of Labor is set to release the September CPI data at 8:30 PM Beijing time tonight, the cryptocurrency market has already started to stir this morning. Bitcoin has risen by 2.06% in the past 24 hours, reclaiming the $110,000 mark.

The data that has been delayed due to the U.S. government shutdown is becoming a key factor in determining the short-term trend of Bitcoin.

01 Market Holds Its Breath: Cryptocurrency Restlessness Ahead of CPI Data

Before the key inflation data was released, the cryptocurrency market was already in turmoil.

According to SoSoValue data, on October 24th, the cryptocurrency market saw a general increase across various sectors, with the CeFi sector leading with a rise of 3.94%.

The current price of Bitcoin is $110,604, up 2.3% in the past 24 hours, while Ethereum is trading around $3,882, up 1.7%.

Behind the strong market performance is the complex expectations of investors regarding inflation data.

The Fear and Greed Index is currently at 30, indicating fear in the cryptocurrency space, but compared to last week’s 22, market sentiment has slightly improved.

This gradual recovery of risk appetite indicates that once the data is favorable, the market may have accumulated a considerable degree of rebound momentum.

02 Data Background: Unique CPI Release Amid Government Shutdown

The release of this CPI report occurs under very special circumstances - it takes place during the shutdown of the United States federal government.

The U.S. Department of Labor has recalled some employees to ensure data is released on time.

This has resulted in the data that was supposed to be released last week being postponed to October 24, and this is the first time since January 2018 that the US CPI data is released on a Friday.

This unusual arrangement adds a layer of mystery to tonight’s data.

The Kobeissi Letter described it as an "unusual" decision, in this context, any unexpected data could trigger a severe market reaction.

03 Market Expectations: 3.1% Inflation Rate as a Watershed for Bulls and Bears

The market generally expects that the year-on-year CPI for September will rise to 3.1%, slightly higher than August’s 2.9%.

This expectation has become a benchmark for measuring market reactions. For cryptocurrency investors, this number will directly determine the next move of Bitcoin.

Geoffrey Kendrick, the Global Head of Digital Assets Research at Standard Chartered Bank, reaffirmed in the latest report that by the end of the year Bitcoin price The target remains $200,000.

But he also admits that Bitcoin dropping below the psychological threshold of 100,000 USD is "almost inevitable," although he believes that this round of decline will not last too long.

04 Two Scenarios: How Data Influences Bitcoin Trends

Analysts generally believe that the CPI data will determine whether Bitcoin breaks through $120,000 or falls back to $100,000.

Scenario 1: Inflation below expectations

If the inflation data is lower than the expected 3.1%, Bitcoin could soar to $120,000.

The realization path of this scenario will function through expectations of interest rate cuts by the Federal Reserve. Dean Chen pointed out that "weaker inflation data may trigger short covering and a flow of risk appetite funds."

The CME FedWatch tool shows that the futures market expects a 96% chance of a rate cut in October, and an 85% chance of another rate cut in December.

Historical data shows that interest rate cuts have a significant positive impact on Bitcoin performance - after the interest rate cut in September 2024, BTC rose by 6.6% within a week, and after the interest rate cut in November, it soared by 32% within a month.

Scenario 2: Inflation Higher Than Expected

If the inflation data is higher than expected, Bitcoin may fall back to around $100,000.

CryptoQuant Research Director Julio Moreno pointed out: "$100,000 is not only a psychological support zone but also the price level where the 365-day moving average is located; if this area collapses, selling pressure may accelerate."

Ryan Lee also analyzes that if inflation rises unexpectedly, it will drive funds back to safe-haven assets, once again testing the support level of Bitcoin around $100,000.

05 Capital Flow: Gold Plunge or Positive for Bitcoin

The recent sharp decline in gold may lead to an increase in the flow of funds into "selling gold to buy Bitcoin."

This trend may provide additional support for Bitcoin. In the past two days, gold has fallen by 8%, evaporating nearly $2.5 trillion in market value, marking the largest drop since 2013.

Bitwise estimates that if only 3-4% of gold funds flow into Bitcoin, it would be enough to push BTC above $242,000.

The signs of this capital rotation have begun to emerge, becoming a potential positive for Bitcoin.

06 Market Structure: ETF Liquidity and Seasonal Factors

Despite facing macroeconomic uncertainty, the market structure of Bitcoin still shows resilience.

The daily spot trading volume of Bitcoin on Binance has almost doubled, increasing from an early range of 3-5 billion dollars to 5-10 billion dollars.

The surge in trading activity reflects heightened investor interest and may help lay the groundwork for a more sustainable Bitcoin recovery once macro uncertainty eases.

In addition, October and November have historically been the two strongest months for Bitcoin. According to CoinGlass data, the average increase in Bitcoin during these two months since 2013 has been 19.8% and 46%, respectively.

Alex Thorn, the research director at Galaxy Digital, believes that the structural bull market in the cryptocurrency space is not yet over, and the next round of price increases will be driven by three main factors: AI capital expenditure, stablecoins, and asset tokenization.

Future Outlook

Tonight’s CPI data will serve as a touchstone to test whether Bitcoin is a safe-haven asset or a risk asset. As of the time of writing, Bitcoin has returned above $110,000, and Ethereum is also approaching the $3,900 mark.

The market is ready to welcome any outcome. As Kendrick said, even if Bitcoin briefly falls below $100,000, it could form a historic bottom, "this might be the last time Bitcoin dips below $100,000."

All eyes are on 8:30 tonight, where every decimal point could trigger hundreds of millions of dollars in capital flow.