Anticipating Bitcoin Rally Following August 10 CPI Inflation Data Release

The US Bureau of Labor Statistics is poised to unveil the upcoming Consumer Price Index (CPI) inflation data on August 10. Insight from on-chain data scrutinizes the possibility of another surge in Bitcoin (BTC) prices following the positive response witnessed in the crypto market after last month's release.

The escalating adoption of Bitcoin among governmental bodies and institutional investors has amplified the influence of the monthly Consumer Price Index (CPI) data on BTC prices. A mere 48 hours subsequent to the prior CPI data release on July 12, the Bitcoin price soared by 4%, setting a new pinnacle of $31,500 for 2023. The question arises: Can Bitcoin replicate this remarkable feat?

Analyzing historical data, a recurrent trend surfaces - Bitcoin has often experienced surges when market expectations point to a decline in CPI or a conservative increase. For instance, the CPI data disclosed on July 12 indicated a modest 1% inflation rise in the preceding month. Leading up to this release, Bitcoin's price had escalated by 5% in the week preceding, with an additional 4% rally post-release catapulting it to its new 2023 zenith.

Akin to this pattern, the week preceding the anticipated CPI data release on August 10 saw BTC's closure at $29,900 on August 9, marking a 4% rise from August 7.

On-chain data unveils a heightened state of preparedness among crypto traders for an imminent wave of bullish price action after the August 10 data release. A significant surge in Bitcoin transaction volumes has transpired in the lead-up.

the BTC Transaction Volume witnessed a climb from 147,670 transactions on August 6 to a rapid ascent of 302,500 transactions by the close of August 9. This translates to a remarkable 104% surge in trading activity prior to the CPI inflation data release. Transaction Volume serves as a barometer for changes in the overall economic activity within a blockchain network. A persistent increase, as observed, often signals a bullish sentiment, indicative of escalating demand among market participants.

Contextualizing the scenario with historical data from July, this 104% upswing in BTC Transaction Volumes underscores a potential surge in bullish price action in the imminent days.

In a more optimistic turn, Bitcoin investors have been transferring their holdings away from exchanges over the past week. This augments the notion that Bitcoin traders are gearing up for a bullish price surge preceding the CPI inflation data release.

As depicted by Cryptoquant data, Bitcoin Exchange Reserves have plummeted by 14,577 coins within the initial 10 days of August. This validates the prediction that investors are inclined towards holding (HODLing) for future gains instead of seeking short-term selling opportunities.

Amidst rising market demand fueled by positive CPI expectations, this reduction in exchange supply could potentially trigger a surge in BTC prices in the upcoming days.

Analyzing In/Out of Money (IOMAP) data, it's evident that bullish sentiment could rally BTC towards $32,000 in the aftermath of the CPI Inflation data release. However, this journey necessitates a preliminary breach of the $30,400 resistance level.

The IOMAP chart illustrates that 2.2 million current holders procured 976,780 BTC at a peak price of $30,403. If the forthcoming CPI data release engenders a bullish momentum akin to that of July 14, this resistance level could evolve into a substantial accumulation zone. Consequently, BTC's trajectory could encompass a reclaiming of $32,000 before bears could mount a potential counter.

Conversely, an unfavorable turn of events could invalidate this optimistic projection, should the BTC price descend below the $28,000 threshold. Yet, a potential resurgence is likely, propelled by 1.92 million addresses that acquired 933,600 BTC at an average cost of $28,583.

Should this support level falter, the BTC price rally might dissipate, retracing toward $27,500.