Bitcoin and Broader Markets Brace for Key U.S. Inflation Data Amid Government Shutdown
Bitcoin and the broader financial markets are preparing for the first release of inflation data following the U.S. government shutdown on October 1. Analysts predict a measured market reaction as investors await the Consumer Price Index (CPI) report scheduled for release on Friday. This data will play a pivotal role in shaping the Federal Reserve’s interest rate decision expected next week.
The report arrives amid significant economic uncertainty, as officials and economists lack recent labor market data due to the ongoing government shutdown.
Moderate Market Response Expected
“Bitcoin and the broader market are expected to respond moderately to this week’s key macro event,” Tim Sun, senior researcher at digital asset financial services company HashKey Group, told Decrypt. He added, “Given slowing employment and moderating demand, even a mild upside surprise in CPI is unlikely to materially alter market expectations.”
Market consensus forecasts headline inflation to rise to 3.1% from 2.9%. However, alternative data from Truflation, a crypto-based independent macroeconomic data provider, indicates a lower figure of 2.28%. The most probable outcome is a modest increase or flat reading, which would support a narrative of gradual inflation moderation.
Sun suggests that the CPI data itself is unlikely to cause significant market disruption, as investor attention remains focused on uncertainties surrounding tariffs and trade policies.
Spotlight on Jobs Data & Tariffs, Not Inflation
The spotlight remains on employment data following Federal Reserve Chair Jerome Powell’s recent comments emphasizing that strong economic growth does not signal a weakening labor market. This concern is further intensified by recent U.S.-China trade developments, where both countries have implemented reciprocal tariffs, adding uncertainty to global markets.
“The impact would largely depend on the magnitude of the surprise,” Sun noted, explaining that a mild CPI overshoot is unlikely to trigger a broad-based selloff since “the inflationary effects of tariff adjustments have already been priced in.”
While the inflation report holds importance from a policy perspective, Sun emphasized that it may not be decisive on its own, stating, “The Fed tends to focus on the cumulative direction of inflation rather than one data point.”
The Week Ahead: Testing Bitcoin’s Resilience
With markets operating somewhat in the dark due to limited recent data, Friday’s CPI release will be a test of whether stabilizing Bitcoin can withstand this first wave of post-shutdown economic clarity.
The crypto market appears more vulnerable than traditional equities as the CPI report approaches. Bitcoin is currently trading around 11% below its October 10 high of $122,500—a level that previously triggered a historic $19 billion liquidation event. In contrast, the S&P 500 index remains just 0.37% below its recent peak, reflecting stronger risk appetite among equity investors.
Investor Sentiment and Options Activity
Amid large exchange-traded fund outflows and prevailing fear in market sentiment, many investors are defensive and hedging against downside risks. Sean Dawson, head of research at on-chain options exchange Derive, highlighted in a tweet that long-dated skew—measuring differences in implied volatility across strike prices for options sharing the same expiration—has trended lower, hitting a 12-month low. This suggests investors are paying a premium for downside protection.
Bitcoin Price Update
Bitcoin has declined 2.5% on the day, trading around $107,000 after reaching an intraday peak of $111,550, according to CoinGecko data.
As markets await the inflation figures amidst ongoing economic and geopolitical uncertainties, the coming days will be crucial in determining the direction of both crypto and traditional financial markets.
https://decrypt.co/345135/bitcoin-braces-for-first-inflation-test-since-us-shutdown
