Bitcoin price stable in the run-up to crucial inflation report

We are not seeing huge volatility in the financial markets today. We have not yet received any groundbreaking news from the Middle East and an important American inflation report will be published later today. However, with the current situation, the question is to what extent we can attach value to the inflation figures.

For the time being, the futures on the main stock market indices are showing slight increases, while the Bitcoin price recorded a small decline.

Inflation figures in the spotlight

Investor attention today is mainly focused on the US Consumer Price Index (CPI) report for February. Economists expect inflation of about 2.4 percent on an annual basis, which is still not the desired 2.0 percent of the US central bank.

Yet the question remains to what extent we can and should attach value to this consumer price index. After all, the inflation report looks back to February and does not yet take into account the recent sharp rise and fall in oil prices as a result of the war between Israel and Iran.

The development of energy prices can of course strongly influence inflation expectations in the coming months.

Oil price remains the determining factor

The oil price experienced extreme fluctuations this week. On Monday, Brent oil rose towards $120 per barrel, due to concerns about possible disruptions to supplies via the Strait of Hormuz.

A sharp decline followed on Tuesday, after reports circulated about the possible use of strategic oil reserves and confusion arose about an alleged escort of tankers by the US Navy.

Ultimately, US WTI oil closed almost 12 percent lower at $ 83.45, while Brent oil fell more than 11 percent to $ 87.80 per barrel. Despite this volatility, the broad stock market remains slightly positive this week, partly because fears of a long-term escalation of the conflict have diminished somewhat for the time being.

According to Fundstrat’s Tom Lee, higher oil prices could even temporarily be positive for equities, as long as economic growth holds up and companies can pass on the higher costs.

For investors, this means that today’s inflation report is likely just a snapshot. The further direction of the markets, and possibly also of Bitcoin, will largely depend on geopolitical developments and their impact on energy prices and interest rate expectations.