Key Bitcoin indicator turns bearish for the first time since October — Will this week’s U.S. economic data trigger more pain?

Bitcoin’s first bearish signal since October is here. With key U.S. data ahead, traders are on edge — will BTC hold support or break lower?

Bitcoin faces uncertainty

Bitcoin (BTC) is treading on shaky ground as it struggles to reclaim six figures, with investors bracing for key economic data that could dictate the market’s next move.

On Jan. 20, Bitcoin soared to a record $109,114, coinciding with Donald Trump’s inauguration as the 47th U.S. president. Since then, it has dropped about 11%, trading at $97,300 as of Feb. 10.

Trump’s latest tariff talk has added to market volatility. On Jan. 9, he signaled that a 25% blanket tariff on steel and aluminum imports was on the table, alongside “reciprocal tariffs” on every country.

A formal announcement is expected as early as Feb. 11 or 12, with steel tariffs possibly taking effect even sooner on Feb. 10.

On Feb. 1, the U.S. imposed 25% tariffs on imports from Canada and Mexico and 10% on Chinese goods, rattling global financial markets — including crypto.

While sentiment somewhat stabilized after a temporary rollback of these tariffs, markets remain fragile, awaiting clarity on the next steps.

Another concerning sign is that MACD 12,26, a widely used momentum indicator, has turned negative for the first time since October 2024.

The Moving Average Convergence Divergence measures the difference between two moving averages — the 12-day and 26-day Exponential Moving Averages — to track momentum shifts.

The last time MACD turned negative was in April 2024; it stayed that way for about six months. During that period, Bitcoin fell from $64,000 in late Apr. to $49,000 by August 2024, a 23% decline, before the trend finally reversed.

Now, with macro risks piling up and key economic data set for release, could Bitcoin regain its strength and push back toward six figures, or is a deeper correction ahead?

A big week for economic data

Bitcoin’s fate this week hangs in the balance as a flurry of key economic data approaches. With inflation numbers, labor market updates, and Federal Reserve signals all set to drop in the coming days, investors are on high alert.

Each data point has the potential to shift market sentiment, influence rate expectations, and dictate the next big move for risk assets, including crypto.

CPI inflation report

Markets will get their first major macro trigger at 8:30 a.m. ET on Wed., Feb. 12, when the Consumer Price Index report for January is released. CPI, a key inflation gauge, measures the cost of living and is closely watched by investors.

Analysts anticipate that consumer prices increased by 2.9% year-over-year, the same rate as in December. Meanwhile, core CPI, which excludes the more volatile food and energy prices, is predicted to ease slightly to 3.1% from 3.2% in December.

On a month-to-month basis, the overall CPI is projected to dip to 0.3% in January, down from 0.4% in December. However, core CPI is believed to have risen to 0.3% from the previous 0.2%.

CPI inflation swaps for January currently point to a 2.9% increase in headline CPI, aligning with analysts’ expectations.

However, if the actual figure falls below these expectations, markets might price in additional rate cuts from the U.S. Federal Reserve, which could lead to a weaker dollar and may also boost riskier assets, such as Bitcoin.

On the other hand, if inflation remains persistent or exceeds expectations, it could prompt the Fed to slow or pause its easing cycle. This outcome would likely weigh on the performance of risk assets, including cryptocurrencies like Bitcoin.

Powell’s testimony holds the key

All eyes will be on Federal Reserve Chair Jerome Powell as he testifies before Congress on Feb. 11-12, offering the latest insights into monetary policy.

The hearing, hosted by the Committee on Banking, Housing, and Urban Affairs, is part of the Semiannual Monetary Policy Report to Congress, where Powell will address economic conditions, inflation, and interest rates.

Markets are watching for any hint about the Fed’s next move. Since September 2024, the central bank has cut rates by 100 basis points, bringing them to 4.25%-4.50% as inflation cooled from its 2022 highs.

However, Powell has cautioned that the fight against inflation isn’t over. If he signals a slower pace of rate cuts, the U.S. dollar could strengthen, putting pressure on Bitcoin. Conversely, any indication that cuts may accelerate could drive bullish momentum for crypto and stocks.

Jobless claims and producer prices

The next key data release arrives on Thu., Feb. 13, with the initial jobless claims report and the Producer Price Index.

Jobless claims will offer a fresh look at the labor market. The latest data from the last week of January showed initial claims rising to 219,000, above expectations, while continuing claims climbed to 1.88 million.

The figures suggest a slight softening in the job market, consistent with expectations that higher rates are slowing economic activity.

At the same time, PPI data will provide insight into wholesale inflation, which often signals future consumer price trends. If producer prices continue cooling, it could reinforce the view that inflation is easing, strengthening the case for additional Fed rate cuts.

However, if PPI comes in higher than expected, markets may see it as a sign that inflation risks persist, prompting a more cautious outlook.

Retail sales and consumer strength

The final major data point arrives on Feb. 14 with the release of U.S. retail sales figures.

Consumer spending is a key driver of economic growth, and the report will indicate whether households are cutting back or continuing to spend despite higher interest rates.

A slowdown in retail sales could signal weakening economic conditions, strengthening the Fed’s case for additional rate cuts—potentially benefiting Bitcoin.

Conversely, if spending remains strong, it may suggest that inflationary pressures persist, making the Fed more cautious and keeping liquidity tighter, which could cap crypto’s upside.

Volatility ahead?

Crypto analysts are sizing up Bitcoin’s next move as a key week unfolds, with economic data and Fed’s signals set to shake up market sentiment.

Michaël van de Poppe remains firmly in the bullish camp, suggesting that Bitcoin could test $105,000 this week and possibly break into new all-time highs before the month is over.

His optimism hinges on macro conditions aligning in Bitcoin’s favor — meaning inflation needs to show further cooling, and Powell must leave the door open for rate cuts to come sooner rather than later.

If markets sense that liquidity conditions will ease faster than expected, Bitcoin could swiftly reverse its recent losses and climb back toward six figures.

But not everyone is convinced that the market is ready for another leg up just yet.

Analyst Decode warns that $91,000 is a key level to watch, and if Bitcoin fails to hold it, the drop could be fast and steep, dragging prices into the $70,000 before any meaningful recovery.

While he doesn’t believe the bull cycle is over, he suggests that Bitcoin may be in for an extended and more complex move rather than a straight shot upward.

Hence, with a week packed full of potential market-moving events, traders should be ready for sharp swings in either direction.