Friday promises to be explosive for the Fed and Bitcoin

This Friday, Wall Street is holding its breath. The US Department of Labor is preparing to unveil inflation figures under unusual circumstances: amid total government shutdown and just five days before the Fed decides on rates. For Bitcoin and crypto markets, every decimal will count.

A surprise announcement on inflation worries crypto investors

The schedule intrigues. For the first time since January 2018, US CPI inflation data will be released on a Friday. Even more surprising: this publication happens during the paralysis of public administrations.

The Department of Labor has exceptionally recalled some employees to ensure the dissemination of the figures, initially scheduled for last week.

This decision described as “unusual” by the Kobeissi Letter raises questions. Why mobilize resources during the shutdown for this specific data? The timing is even more striking as it comes five days before the Federal Reserve’s monetary decision. Financial markets, operating blindly without major economic reports, now watch this number nervously.

Jerome Powell has already announced a 25 basis point cut. But this promise could shatter if inflation exceeds 3.1%. The FOMC would then find itself caught between the need to support the economy and the imperative to curb price rises. The CME FedWatch tool estimates a total 50 basis point reduction this year, but uncertainty remains.

The crypto market, particularly sensitive to monetary policies, is already reacting. Jack Mallers, head of Strike, anticipates a rebound amid recent banking tensions. Non-performing loans from Western Alliance and Zions fuel speculation of a monetary easing favorable to digital assets.

Ryan Lee, chief analyst at Bitget, confirms this analysis:

The expected 25 basis point cut could be a liquidity catalyst for crypto markets. Lower borrowing costs generally stimulate risk appetite, potentially triggering gains of 5 to 10%.

Bitcoin rides on trade optimism

Cryptos show a spectacular rebound. Bitcoin climbs 3% to reach $111,049, while trading volumes explode by 75% in 24 hours.

This euphoria coincides with easing trade tensions between Washington and Beijing. Donald Trump reassured markets on Chinese tariffs, causing gold to drop from its historical peak of $4,375.

Investors are betting on a “bullish CPI” that would strengthen the rate cut scenario. Coinglass data reveal massive purchases on derivatives, suggesting a possible short squeeze on bitcoin. Ethereum rebounds above $4,000, while BNB and XRP gain 3% and 4.5%, respectively.

This week’s scheduled meeting between Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng fuels optimism. It lays the ground for a possible Trump-Xi summit later this month. Analyst Ted Pillows identifies $112,000 as a crucial level: “Bitcoin holds, but sentiment remains cautious,” he notes.

This favorable context is accompanied by a major institutional signal. The Fed held a historic payments innovation conference Monday, officially welcoming the crypto giants for the first time.

Sergey Nazarov from Chainlink, the heads of Circle, Paxos, and Coinbase took part in discussions alongside BlackRock and JPMorgan. A radical change after years of regulatory distrust.

The CPI release this Friday will determine the direction of crypto markets for the coming weeks. Between geopolitical easing and monetary uncertainty, bitcoin navigates troubled waters. But the Fed’s historic opening to the sector could sustainably redefine the rules of the game.