BTC Price Volatility Looms as US Inflation Figures Approach

Bitcoin's near-term outlook is being closely watched ahead of the release of US inflation figures on Wednesday. The cryptocurrency has been trading around $63,800 after falling over 2% in the previous two days.

The mixed spot Exchange Traded Funds (ETFs) flows suggest cautious institutional demand for Bitcoin. Meanwhile, traders are turning their attention to the upcoming US Consumer Price Index (CPI) data, which could influence Federal Reserve (Fed) rate hike expectations and trigger fresh volatility in the Crypto King.

A hotter-than-expected core CPI reading could strengthen expectations for a more hawkish Fed, supporting safer assets like the US Dollar (USD) and Treasury yields, and weighing on risk-sensitive assets like Bitcoin. Conversely, softer inflation data could revive expectations for Fed rate cuts, weaken the Dollar and yields, and provide a bullish catalyst for Bitcoin.

However, traders should be cautious as persistent geopolitical uncertainty could limit the initial reaction and keep Bitcoin vulnerable to heightened volatility following the CPI release. Institutional investors show mixed signs, with mild inflows into spot BTC ETFs and a report highlighting that long-term holders are absorbing Bitcoin.