Analyst Predicts CPI Data Will Determine Year-End Market Trends

As markets prepare for the upcoming US Consumer Price Index (CPI) report, analysts are emphasizing that its results could play a crucial role in deciding whether risk assets will rally toward the year's end or face renewed selling pressures.

Key Takeaways:

The upcoming CPI report is critical as it may influence expectations around interest rate cuts, impacting the movement of risk assets.
Bitcoin is currently stable around $85K, with mixed US economic data limiting traders' risk appetite.
Inflows from exchange-traded funds (ETFs) and decreasing leverage indicate that buyers are beginning to support the $85K price level, despite general market caution.

In a recent post on X, crypto analyst Mister Crypto highlighted that “Jerome Powell recently remarked that interest rates are at appropriate levels for observation and data assessment.” He implied that a CPI figure exceeding expectations could dampen hopes for interest rate cuts, negatively affecting both stock and cryptocurrency markets. Conversely, a weaker CPI print could encourage optimism toward more accessible monetary policies and spark a rally as the year concludes.

CPI Data's Impact on Year-End Markets

Bitcoin Stagnates Near $85K Amid Mixed Economic Signals

Bitcoin finds itself in a precarious position ahead of the CPI release. The dominant cryptocurrency dropped approximately 2% on Tuesday, settling around $85,300 and maintaining a narrow trading range between $85,000 and $90,000 over the past week.

According to Samer Hasn, a senior market analyst at XS.com, the inability to push higher signals a broader risk-averse sentiment fueled by mixed economic indicators from the US. Recent data has been inconclusive, with nonfarm payrolls performing better than expected, but unemployment rising and S&P Global PMI readings falling short of forecasts.

Hasn remarked, “The mixed signals have sustained bearish momentum, restricting any immediate upward reactions.” Nonetheless, Bitcoin seems to be finding tentative support around the $85,000 mark. He noted initial signs of bargain hunting, with cautious buyers stepping in after several weeks of selling pressures.

On-chain data from BGeometrics corroborates this observation, highlighting slight increases in holdings among both whales and retail investors who own between 1 and 100 Bitcoin. Meanwhile, addresses with holdings from 100 to 1,000 BTC have seen a slight decline, indicating a pause in the heavy distribution by whales observed in November.

Furthermore, ETF inflows provide an additional layer of support. Data from SoSo Value show that US spot Bitcoin ETFs experienced over $450 million in inflows on Tuesday, despite a slowdown in futures market trading.

Derivatives data reveals a continuing decline in speculative activity. According to CoinGlass, open interest in crypto futures has dropped by about $11 billion over the past week, nearing its lowest figures since June. With reduced leverage and stable spot demand, Hasn commented that the $85,000 region is looking less like a potential trap and more like a price point that buyers are keen to support.

Long-Term Selling Pressure on Bitcoin May Be Abating

Bitcoin has experienced significant selling pressure from long-term holders since 2024; however, this trend might be nearing its conclusion, as per a new report from research and brokerage firm K33.

K33 estimates that approximately 1.6 million BTC (equivalent to around $138 billion) has re-entered circulation in the past two years as early investors realized profits. Vetle Lunde, head of research at K33, indicated that the magnitude of these movements suggests intentional selling rather than technical reasons like wallet consolidations or ETF-related transfers.

The report highlights that 2024 and 2025 could be among the largest years for reactivating long-term supply, a shift primarily driven by actual selling rather than speculative trading, aimed at deeper institutional liquidity.