LONDON (IT BOLTWISE) – Bitcoin and financial markets face a crucial week as the first inflation data release following the US government shutdown approaches. Analysts expect a moderate market reaction as the Federal Reserve prepares its interest rate decision. The upcoming data could significantly influence the direction of the markets.
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Bitcoin and global financial markets are preparing to release the first inflation data since the US government shutdown on October 1st. Analysts are expecting a measured market reaction as consumer price index data due to be released on Friday will play a crucial role in the Federal Reserve’s interest rate decision next week. The release comes amid significant economic uncertainty as officials and economists lack current labor market data due to the shutdown.
Tim Sun, senior researcher at digital wealth services firm HashKey Group, explained that Bitcoin and the broader market are expected to react moderately to this important macroeconomic event. Given declining employment and moderate demand, even a slight positive surprise in consumer prices is unlikely to significantly change market expectations. Derek Lim, head of research at crypto market making firm Caladan, shares this sentiment and expects a muted reaction if there are small deviations.
The consensus forecast is for headline inflation to rise from 2.9% to 3.1%. However, data analysis from Truflation, a crypto-based independent macroeconomic data provider, suggests a lower figure of 2.28%. A moderate rise or unchanged reading would fit a narrative of gradual inflation moderation, according to Sun, who points out that the data itself is unlikely to cause significant disruption as investors’ attention remains focused on the uncertainties of ongoing tariff and trade policy.
Attention is also turning to labor market data after Federal Reserve Chairman Jerome Powell recently stressed that strong economic growth does not indicate a weak labor market. This concern has been heightened by recent developments in US-China trade, with both nations imposing reciprocal tariffs, creating additional uncertainty for global markets. Sun said the impact would largely depend on the size of the surprise, with a mild breach of expectations unlikely to trigger a broad sell-off as the inflationary impact of tariff adjustments was already priced in.
While the inflation report is important from a policy perspective, it may not be decisive on its own, according to Sun. The Fed tends to focus on the cumulative direction of inflation rather than a single data point. With markets somewhat in the dark, Friday’s release will test whether stabilizing Bitcoin can weather the first wave of economic clarity post-shutdown.
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