Softer inflation gives bitcoin room to run, but downside risks lurk beneath: analysts

Bitcoin climbed after the U.S. consumer price index rose 3.0% year over year, slightly below the 3.1% estimate, and provided key inflation data despite the ongoing government shutdown.

BTC, which had reclaimed $110,000 ahead of the print, initially pushed higher and was trading in the low to mid-$111,000s on Friday, while ether inched toward $4,000, according to price data. As of publishing, bitcoin has retreated to around $110,500.

Analysts said the CPI report has cleared a vital policy overhang, even as structural market risks remain. Nic Puckrin, co-founder of The Coin Bureau, called the release “the most impactful inflation report of the year,” saying it reduces the uncertainty created by the U.S. government gridlock. It also paves the way for an extended Fed easing cycle that risk assets have been waiting on, he added.

“This report finally dispels some of this uncertainty,” Puckrin said in a statement. “It sets the stage for the FOMC to continue its rate-cutting cycle beyond next week, and this is what risk assets have been waiting for to resume their rally."

Further, Puckrin argued that a sustained move above $116,500 would open the door to a new bitcoin record. “As we head into the weekend and liquidity thins, we could see a pronounced move higher as investors rotate from gold into bitcoin, provided no negative headlines surface,” Coin Bureau’s founder noted.

Indeed, broad crypto market capitalization ticked up after the print, though gains remained concentrated among a handful of large-cap tokens.

Lingering risks 

Still, some experts urged caution. Ahead of the CPI report, Timothy Misir, head of research at BRN, had said the market remains in a “proof-of-conviction phase.”

Options open interest floated near record levels, Misir warned, leaving dealers short gamma and vulnerable to rapid, outsized intraday moves if price runs into concentrated liquidation clusters — notably around $114,000. Long-term holder distribution also continues to act as a counterweight to ETF demand and mid-tier accumulation, according to the BRN analyst.

“Today’s print removes a key policy overhang, but the market’s structural fragilities remain,” he said in a note. “Elevated options OI and persistent LTH selling mean rallies can be amplified or reversed quickly.”

Touching on whale activity, Misir said mid-tier “Dolphin” wallets (100–1,000 BTC) have accumulated significantly this year and now hold roughly 26% of the circulating supply. That cohort has been the marginal buyer but could pause and sap momentum.

Flows and onchain metrics showed a mixed picture. Spot bitcoin ETFs recorded modest net inflows around the CPI window, led by a sizeable take into BlackRock’s IBIT, while Ethereum funds continued to see redemptions.

Analysts split on near-term outcome

Analysts flagged two clear pathways from here: a bullish scenario in which continued ETF demand and retail rotation from gold to crypto push BTC above the $116,500 resistance noted by Puckrin. This outcome potentially reignites a broader risk-on leg.

Conversely, a risk scenario in which renewed ETF outflows, a sudden macro shock, or heavy options-driven dealer hedging around liquidation clusters produce sharp intraday losses that cascade into deeper consolidation.

Meanwhile, the macro front still suggests a bumpy road for cryptocurrencies. White House Press Secretary Karoline Leavitt stated that the ongoing federal government shutdown, now in its fourth week, will likely prevent the release of the October CPI inflation report next month.

This would mark the first time in history that the report isn't published, as the Bureau of Labor Statistics lacks funding to deploy surveyors and collect necessary data. While the timing of such a data blackout remains uncertain, Puckrin warned that a lengthy government pause would likely dampen bullish sentiment and stall policy catalysts.

“If the government shutdown continues into November, this would weigh on sentiment,” Puckrin wrote. “Not least because it means the all-important crypto market structure bill will be delayed further, as will altcoin ETF approvals. The closer we get to Thanksgiving, the less time there is to get legislation approved before the holiday season begins.”