High Inflation is Coming, Analysts Claim: Will Bitcoin Bounce Back?

• Bitcoin fell to $77K as traders prepared for a week of Fed and US economic data.
• Rising oil, tight labor supply, and AI energy demand could push inflation higher.
• Bitcoin needs softer inflation and a break above $80,700 to regain upside momentum.

Bitcoin traded lower near $77,000 in Asian hours, down 3%, as markets moved into a heavy macro week packed with Federal Reserve decisions and major US data releases.

The bigger issue for traders is not today’s price move but whether inflation is set to rise again, forcing the Fed to stay tight for longer. If that happens, Bitcoin may stay capped until markets reprice rate expectations.

Analysts Warn Inflation Risks Are Building

In a MarketWatch column, Craig R. Torres and Fabio Natalucci said the Federal Reserve needs to update its message because higher U.S. inflation is likely ahead.

They pointed to several pressure points. Annual inflation has stayed above the Fed’s 2% target for five years, oil prices have risen due to the Iran war shock, labor supply is tighter due to demographics and US immigration limits, global trade disinflation has weakened, and AI energy demand may exceed available supply.

They argued that current Fed communication still carries a mild easing bias, while markets continue to expect rates to remain mostly flat over the next year. Stronger inflation with soft Fed guidance can loosen financial conditions too early.

Markets See No June Cut

According to market pricing cited by traders, June rate cuts are nearly off the table, with prediction market Polymarket showing a 95% chance of no change.

Investors are now focused on whether the Fed signals cuts later this year, or starts discussing the risk of future hikes if inflation rises again. Upcoming data this week includes GDP, PCE inflation, and the Employment Cost Index. These could reshape rate expectations quickly.

Bitcoin Stuck Below Key Levels

Meanwhile, Bitcoin has struggled to regain momentum. The asset traded around 4% below the short-term holder cost basis near $80,700, a level many traders watch as a signal of recent buyer strength.

A move above that zone would likely require markets to believe oil-driven inflation is temporary and that the Fed can still ease later this year. Without this transition, Bitcoin may remain range-bound.

On the other hand, Brent crude stayed above $100, adding pressure to inflation forecasts. Higher oil affects transport, food, chemicals, and fertilizer costs. If those price increases spread into broader inflation, the Fed may delay cuts or even reopen the discussion around tighter policy.

Analysts noted the Fed has often looked through temporary energy spikes, but persistent energy inflation is harder to ignore. This creates a difficult setup for risk assets like Bitcoin, which usually perform better when liquidity expectations improve.

Related: Bitcoin Price Prediction: Three Rejections At $79,400 In Eight Sessions As Fed Decision Looms