Bitcoin (BTC) remains trapped in a tight range between $90,000 and $110,000, struggling to break past key resistance levels as investors wait for fresh inflation data.
The upcoming US Consumer Price Index (CPI) release could determine whether Bitcoin finds renewed momentum or remains stuck in its current consolidation phase.
With a market capitalisation hovering around $1.9 trillion, Bitcoin’s price movements are largely influenced by macroeconomic factors.
Source: CoinMarketCap
The Federal Reserve’s stance on interest rates and inflation expectations remain the dominant forces shaping investor sentiment.
While Bitcoin recovered after Trump’s inauguration and the Bitcoin reserve plan gaining attention, its long-term rally hinges on stable regulatory clarity.
The next few days could be crucial in defining Bitcoin’s short-term trajectory as traders assess the CPI data and the Fed’s policy outlook.
Fed’s interest rate stance keeps Bitcoin under pressure
Bitcoin’s price struggles stem largely from the Federal Reserve’s reluctance to cut interest rates despite slowing inflation.
Markets had initially hoped for a dovish pivot, but Fed Chair Jerome Powell has repeatedly signalled that rate cuts are unlikely in the near term.
The CME FedWatch tool shows a 54% probability of just one rate cut in 2025, with a 48% chance of any cut by June.
The likelihood of two rate cuts in 2025 has dropped to 42%, and some traders now believe there is a 20% chance the Fed won’t cut rates at all.
This restrictive monetary policy has limited Bitcoin’s upside, as higher interest rates make traditional financial assets like bonds and savings accounts more attractive compared to riskier assets like cryptocurrencies.
Inflation expectations remain a key risk
Beyond the immediate CPI data, longer-term inflation expectations are adding further uncertainty.
According to Mott Capital Management, two-year inflation expectations have risen to 2.8%, the highest level since early 2023.
Concerns over rising prices could push the Fed to maintain its tight policy stance, which would further weigh on Bitcoin.
Trade tensions and potential new tariffs also add inflationary pressures, making it less likely that the Fed will loosen its grip on interest rates anytime soon.
If inflation prints higher than expected, Bitcoin could see a decline towards the lower end of its trading range.
A softer CPI reading might provide short-term relief, though a sustained rally remains unlikely without clearer signals from the Fed.
Market sentiment hinges on regulatory clarity
While macroeconomic factors dominate Bitcoin’s price action, regulatory uncertainty continues to impact investor confidence.
Many traders remain cautious, awaiting clearer rules for cryptocurrency taxation and exchange oversight in key markets like the US and UK.
Stable regulatory policies are seen as a prerequisite for a full-fledged crypto rally.
Institutional investors, in particular, are hesitant to allocate significant capital into Bitcoin without a clear legal framework.
The market’s reaction to any regulatory announcements in the coming months could play a major role in determining Bitcoin’s long-term trajectory.
Bitcoin faces hurdles despite resilience
Bitcoin’s price remains resilient near $100,000, but several headwinds continue to limit upside potential.
The Fed’s tight monetary policy, rising inflation expectations, and regulatory uncertainty all contribute to the current consolidation phase.
With traders now watching the CPI data for direction, Bitcoin’s next move will depend on whether inflation surprises to the upside or confirms a cooling trend.
Until then, Bitcoin is likely to remain range-bound, awaiting a major catalyst to break out of its current price levels.
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