Bitcoin Climbs 2% While Analysts Remain Wary of US Inflation Report

Bitcoin traded up 1.8% at $54,440 on Monday morning during European trading hours, rebounding from a weekend slide. The dip appeared to have been set off by Friday's disappointing U.S. jobs report, however, analysts are wary of significant outflows from spot ETFs and upcoming economic data releases that could impact market direction.

The world's leading cryptocurrency showed a modest recovery following a weekend dip to $53,636, according to CoinGecko data.

However, this uptick comes against a backdrop of substantial outflows from Bitcoin ETFs.

Last week, Bitcoin spot ETFs experienced a net outflow of $706 million, with none of the 12 funds recording positive inflows, according to datafrom SoSo Value.

In a note sent to Decrypt, BRN analyst Valentin Fournier said the release of the core U.S. Consumer Price Index (CPI) on Tuesday and the Producer Price Index (PPI) on Thursday this week will be crucial and will heavily influence the Federal Reserve's upcoming interest rate decisions.

The blow-hot, blow-cold movement in Bitcoin’s price follows Friday's U.S. jobs report, which revealed the economy added 142,000 nonfarm payrolls in August, surpassing July's downwardly revised 89,000 but falling short of the 160,000 consensus estimate.

Among the major ETF issuers, the Grayscale Bitcoin Trust (GBTC) saw $160 million in outflows, while Fidelity's Bitcoin ETF (FBTC) led the exodus with a $404 million net outflow.

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, mirrored Bitcoin's movement, trading up 1.5% at $2,330.

However, Ethereum-based products also faced headwinds, with spot ETFs recording a net outflow of $91 million last week. The Grayscale Ethereum Trust (ETHE) alone accounted for $111 million in outflows, data shows.

Julien Bittel, CFA and Head of Macro Research at Global Macro Investor, drew attention to Bitcoin's current price structure, noting its similarity to patterns observed in 2019.

"Bitcoin has been stuck in a consolidation phase, and interestingly, just like in 2019, this consolidation has lasted exactly 175 days (so far)," he said on Twitter Monday.

"We're now approaching that critical juncture where things could start moving in a big way. The next week will be incredibly important to watch. All eyes on how Bitcoin reacts as we hit this potential inflection point,” he added.

Meanwhile, commenting on the potential market volatility, Fournier said, "Given the high market volatility and potential downside toward $49,000, we advise reducing exposure and waiting for a more favorable entry point."

The analyst further said that a 50 basis point rate cut is increasingly likely, which could lead to a short-term market selloff as it highlights heightened recession risks. However, in the medium to long term, lower rates are expected to enhance valuations and renew interest in riskier investments.

Edited by Stacy Elliott.