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) may well increase the key for the coming weeks and months.
At 8:30 PM ET, the CPI for November will be released. Tomorrow, Wednesday at 2:00 PM ET, the Federal Open Market Committee (FOMC) will announce its December interest rate decision.
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 the CPI comes out better than expected today, there will likely be a rally for risky assets like Bitcoin. If the CPI falls short of expectations or even rises, it could spell a rude awakening for BTC investors – at least that is the market consensus.
Expectations for today’s CPI are 0.4% lower than last month, when it came in at 7.7%. As a result, the expected CPI is 7.3%.
JPMorgan draws possible scenarios
Meanwhile, banking giant JPMorgan published an analysis that CPI inflation below 6.9% could spark a massive rally in traditional trading markets.
Given Bitcoin’s correlation to the USD markets and the S&P 500 in particular, this could likely have a beneficial effect on the BCT price. In total, JPMorgan has listed 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 effect on the Bitcoin and crypto markets.
However, since the market is highly dependent 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 fall or stagnation in inflation.
According to the banking giant, the S&P 500 would plummet as a result, by 2.5% to 3.5%.
The bullish scenarios for Bitcoin
Additionally, JPMorgan assigns a 15% probability to the bullish scenario of a CPI landing at 7.0% to 7.2%, which could signal 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 BEING 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 lower, only a 5% chance. But then the S&P 500 could experience a legendary 8% to 10% rally. Since Bitcoin is the higher beta, this could mean double-digit gains for Bitcoin.
At the time of writing, BTC investors have seemingly remained on the sidelines, awaiting the CPI announcement. BTC stood at $17,168.
