Bitcoin Braces for CPI as Yields Call the Shots: Range Intact, Cuts Pushed to H2

Markets don’t need another headline—they need a lower discount rate. After January payrolls rose by 130,000, rate futures swiftly shoved expected Fed cuts into the back half of the year and tightened financial conditions. Crypto felt that gravity immediately: Bitcoin’s bid didn’t break, but momentum did.

The delayed January CPI, now due Friday after the partial government shutdown, is forecast at 2.5% year-over-year—0.2 percentage points below December. That single input likely matters more than the jobs beat for this tape. Derek Lim, who leads research at Caladan, has argued a softer inflation read would nudge the Fed toward earlier easing, a setup that tends to help risk assets by pulling down discount rates and re-opening the liquidity channel that crypto thrives on.

The rates backdrop explains the malaise. CME-derived probabilities put the odds of an unchanged policy rate at 3.50%-3.75% near 94.6%, and the term structure has shifted to price cuts later, not sooner. HashKey Group’s Tim Sun framed the paradox cleanly: better growth signals can be bad for risk when they validate “higher for longer.” As long as Treasury yields stay elevated, financing costs resist falling and the opportunity cost of holding long-duration, cashflow-distant assets—crypto included—stays high.

Price action reflects that tug-of-war rather than panic. Bitcoin is down about 0.5% over 24 hours to $67,200, with Ethereum flat near $1,970. BTC has been coiling between $62,822 and $72,000 for a week, and realized volatility has cooled since the late-January and early-February shakeout. Sun notes that sell-side pressure looks fatigued—on-chain distribution and tape speed suggest the decline is decelerating—yet there’s no credible reversal signal without a catalyst that dents real yields.

That’s the fulcrum: real yields. If CPI prints at or below 2.5%, front-end yields can slip, the dollar can ease, and risk budgets tend to expand. In crypto microstructure, that often shows up as healthier spot demand, steadier perp funding, and tighter basis—supportive for breaking the top of the range. A hotter print does the opposite: it entrenches “later and less” on cuts, sustains elevated discount rates, and keeps Bitcoin oscillating within the current band with vulnerability toward the $62,8k area if liquidity thins.

Investors aren’t waiting for a grand pivot; they’re watching for rate relief. Until Treasury yields give way, crypto likely trades liquidity-beta rather than narrative. For this CPI, watch the 2-year and 10-year move first; Bitcoin will follow the cost of capital, not the headline.