BTC Reverses 3.5% Pump Ahead of CPI — Will Inflation Data Trigger a Crypto Comeback?

Bitcoin’s (BTC) short-term momentum took another hit on Wednesday after it reversed all of Monday’s pump, dropping from a high of $114,000 back to the $107,000–$108,000 support zone.

The 3.5% pullback has left traders uneasy, with many watching the upcoming U.S. Consumer Price Index (CPI) data for cues on market direction.

The CPI report, originally delayed by the U.S. government shutdown, is now scheduled for October 24.

Consensus expectations sit at 3.1%, but after six consecutive months of rising inflation readings, investors fear another upside surprise could unsettle risk markets.

Historical Pattern Shows Inflation Data Could Trigger a Crypto Comeback

Bitcoin’s recent price action mirrors a recurring pattern.

The last three CPI releases have all coincided with local tops, each following a burst of bullish sentiment.

This has fueled skepticism that another rally ahead of the data could face swift rejection.

However, the setup looks different this time. Bitcoin is entering the CPI week already down over 3.5% in the past seven days, which could make it more sensitive to Fed rate cut relief rallies if inflation surprises to the downside.

CryptoNews research examined the last four Fed rate cuts and found that each sparked short-term rallies in digital assets.

After the September 2024 cut, Bitcoin rose 6.6% in a week to around $64,300, signaling investors’ welcome of the Fed’s policy pivot.

The November 2024 cut triggered a much stronger move, with BTC up 16% in a week and 32% over the month.

By December 2024, the momentum cooled as Bitcoin briefly topped $108,000 before retreating below $100,000.

These reactions suggest that monetary easing still carries strong upside implications for crypto markets, a trend that could reemerge if inflation data softens and the Fed maintains dovish guidance.

Gold’s -8% Drop Could Fuel Bitcoin Rotation

With gold marking a potential top and risk sentiment subdued, traders are now watching for signs of liquidity rotation back into crypto.

The precious metal extended two-day losses to -8%, erasing over $2.5 trillion in market cap, on track for its largest two-day drop since 2013.

Bitcoin bull market fractals show that gold topped in October 2020, and Bitcoin exploded right after.

According to asset manager Bitwise, only 3-4% capital rotation from gold to Bitcoin could push BTC to over $240,000 from current levels.

NVT Golden Cross Says Bull Market Not Over

While many crypto bears are calling for the top and the end of the bull run, the Bitcoin NVT Golden Cross indicator, which measures whether Bitcoin is overvalued or undervalued relative to on-chain network activity, shows that the top is not yet in.

Similarly, since the massive liquidation event on October 10, the crypto market has experienced a real shockwave.

Data from CryptoQuant shows that since January 2025, daily BTC spot volumes on Binance ranged between $3 billion and $5 billion.

However, since October 10, volumes have surged, now up between $5 billion and $10 billion per day.

This acceleration shows a renewed interest in spot trading that could lay the groundwork for a more sustainable bullish recovery.

Technical Analysis: Bitcoin Support Holds at $108K-$112K Zone

On the technical front, Bitcoin’s 3-hour chart shows that the asset has since entered a correction phase, breaking below the 0.5 Fibonacci level and currently testing support near the 0.25 level around $112,000.

The recent price action shows increased volatility with sharp moves in both directions, indicating indecision in the market.

The projected trajectory suggests Bitcoin is trying to find support in the $110,000-$112,000 zone before potentially rebounding toward $117,000.

If Bitcoin can hold above $108,000 and form a base, the path of least resistance appears to target the $117,000 level first, with potential to retest the previous highs near $126,000 if bullish momentum returns.

However, a breakdown below $106,000 would invalidate this bullish scenario and could trigger further downside pressure.

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