Bitcoin (BTC) is nearing record price highs, potentially sparking accelerated gains in the broader altcoin market. This follows easing U.S.-China trade tensions, which may lead to a positive market reaction if the April CPI shows a potential slowdown.
The U.S. has reached a trade agreement with China after high-level negotiations in Geneva, announced by U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. Both countries plan to issue a joint statement on the trade talks. This agreement comes after weeks of escalating trade tensions that saw tariffs rise above 100%, threatening global inflation.
With the trade deal in place, continued softening of CPI could increase bets on Fed rate cuts, acting as a bullish catalyst for Bitcoin to surpass $110,000. A higher-than-expected CPI might be dismissed as reflecting past tariffs rather than current de-escalation.
The CPI due on Tuesday is expected to show a year-on-year cost of living decrease to 2.3% in April from 2.4% in March, according to RBC. The core CPI is anticipated to remain at 2.8% year-over-year in April, with moderation in rent inflation.
Markus Thielen, founder of 10x Research, stated that if the headline CPI remains unchanged at 2.4% in April, the market may view the inflation report positively. This week’s inflation data could thus provide a bullish catalyst.
Bitcoin is currently trading around $104,000, just 5.1% away from new highs above $109,350. Prices have surged 10% last week due to inflows into spot exchange-traded funds (ETFs). BlackRock’s spot Bitcoin ETF (IBIT) has seen net inflows for 20 consecutive trading days, accumulating over $5 billion in investor funds.
Ether (ETH), the second-largest cryptocurrency, rose 39% last week to $2,500, its best performance since December 2020. Other altcoins like XRP, DOGE, ADA, and SOL also surged significantly. According to HTX Research, there are no signs of speculative frenzy yet, suggesting the rally could continue.
Implied volatility in Bitcoin options remains stable between 50%-55%, far below the extreme levels typically seen during past bull markets peaks. CME Bitcoin futures open interest stands at $14.8 billion, below the $20 billion peak observed during the 2020 Trump election period. As long as yields remain below 4.8% and ETF inflows are steady, Bitcoin is likely to consolidate in the $105,000–$115,000 range awaiting the next breakout trigger.
— new from CoinDesk