As the anticipation builds for the release of the U.S. inflation data, Bitcoin (BTC) traders are taking precautions to protect against potential downside risks in the market. The upcoming report, scheduled for 12:30 UTC, is expected to shed light on the impact of President Donald Trump’s trade tariffs on consumer prices.
Market analysts are forecasting a 2.8% year-on-year increase in the consumer price index (CPI) for July, slightly up from the previous month’s 2.7% rise. Additionally, a monthly increase of 0.2% is projected, a slight dip from the previous month’s 0.3%. Excluding the volatile food and energy components, the core CPI is expected to show a 0.3% rise in July.
The potential implications of a higher-than-expected CPI figure are on the minds of investors, as it could influence the Federal Reserve’s decisions on interest rates and subsequently impact risk assets like BTC.
Timothy Misir, head of research at BRN, emphasized the significance of Tuesday’s U.S. CPI release, stating, “The market’s immediate focus is on Tuesday’s U.S. CPI print, with the market expecting a modest uptick to 2.8% YoY. A softer reading would likely cement a September rate cut by the Federal Reserve, a positive for risk assets. Conversely, a hotter print could stall the rally, triggering tactical profit-taking across risk assets.”
With the potential market volatility in mind, traders are taking proactive measures to safeguard their positions. Singapore-based QCP Capital noted an increase in demand for short-dated put options, signaling a move to protect against potential BTC losses in case of an unfavorable outcome.
QCP Capital’s market insights team shared, “In anticipation, some traders are hedging event risk, with front-end $115,000–$118,000 BTC puts seeing increased demand to protect against a downside surprise. This defensive positioning sits alongside short-call covering from topside buyers.”
While some are preparing for downside risks, traders are also cautious about potential upside movements, as indicated by the covering of short call positions. BTC was trading at $118,525 at the time of reporting, reflecting the market’s cautious sentiment amidst the upcoming CPI data release.
For more insights: Market Speculation Grows as Bitcoin and Ether Reach Crosshairs of $135K and $4.8K, Respectively
