Bitcoin Price Volatility Ahead of US CPI Data Release

Bitcoin's price has been volatile in recent days, trading at around $63,800 on Wednesday after falling more than 2% over the previous two days. Mixed spot Exchange Traded Funds (ETF) flows suggest cautious institutional demand.

The upcoming US Consumer Price Index (CPI) data release on Wednesday could influence Federal Reserve rate hike expectations and trigger fresh volatility in Bitcoin.

According to CME Group's FedWatch Tool, the odds of a September Fed rate hike stand at nearly 50%. A hotter-than-expected core CPI reading could strengthen expectations for a more hawkish Fed, weighing on risk-sensitive assets like Bitcoin. Conversely, softer inflation data could revive expectations for Fed rate cuts and provide a bullish catalyst for Bitcoin.

Institutional investors show mixed signs of demand, with SoSoValue data showing a mild inflow of $4.89 million in spot BTC ETFs after an outflow of $144.67 million the previous day.