The Fed Expects Inflation to Heat Up in April, with BTC Facing the Risk of Falling to $70,000

BlockBeats News, May 10th – Bitcoin may face weaker support next week when the United States releases its inflation report, increasing the risk of a pullback to $70,000. The latest real-time inflation forecast by the Cleveland Fed estimates that April's CPI year-over-year will rise to 3.56%, higher than March's 3.3%; the monthly CPI is expected to be 0.45% (lower than 0.9%), with core CPI year-over-year at 2.56% and month-over-month at 0.21% (previously 2.6% and 0.2%). The official April CPI report will be released on May 12th.

This keeps the inflation landscape complex—despite the monthly pace slowing down and core inflation remaining relatively stable, overall CPI is still expected to reaccelerate. This is not an ideal environment for risk assets. A stronger annual CPI reading may reinforce the Fed's reluctance to quickly cut interest rates, often dampening speculative trades like Bitcoin. However, Bitcoin has previously avoided a deeper retracement in a heated CPI. After the March CPI report showed overall inflation rising from 2.4% in February to 3.3%, the BTC price actually increased by over 15%. One reason is that institutional buyers absorbed a volume equivalent to over 500% of newly mined Bitcoin supply, with Strategy holding the majority. But this support now appears to have weakened. Strategy has paused its BTC purchases, while its STRC preferred shares continue to trade below $100 face value. When STRC is below face value, the efficiency of issuing new shares decreases, limiting Strategy's ability to raise new capital to buy more Bitcoin.

Analyst Killa stated that large investors may begin to reduce risk exposure around the inflation report, citing a similar cautious pattern around the 2025 CPI event. He said, "The key support level is the weekly open price of $78,600. If breached, the next downside targets are $74,000 to $75,000." Technically, Bitcoin is forming a classic rising wedge pattern on the daily chart, a pattern considered a bearish reversal. As of Sunday, BTC is ascending towards the wedge's apex, around $84,000, where two trend lines converge. A break below this point could trigger a decline to around $70,000, the measured downside target of the wedge. Conversely, a breakout above the apex (coinciding with the 200-day EMA) could completely invalidate the bearish structure, with the next upside targets in the $90,000 to $95,000 range.