Crypto CPI Watch: Bitcoin RSI Bullish Divergence Signals Potential Recovery Ahead of U.S. CPI Release

Key Takeaways:Bitcoin forms a bullish RSI divergence as selling momentum weakens despite price declines below $80,000 this week.U.S. CPI data release today could influence rate cut expectations, with markets now forecasting four Fed cuts in 2025, up from just one in January.A softer-than-expected inflation report could fuel a Bitcoin rebound, while a hot CPI print may trigger further downside.Bitcoin’s Technical Setup Points to Potential ReversalBitcoin (BTC) has suffered a sharp decline from its $100,000 high last month to below $80,000 this week, impacted by:Wall Street’s risk-off sentiment due to Trump’s trade tariffs and recession fears.Disappointment over Trump’s Strategic Bitcoin Reserve, which did not include fresh BTC purchases.Broader market concerns over interest rates and economic uncertainty.However, a bullish RSI divergence has emerged on BTC’s daily chart. The Relative Strength Index (RSI) formed a higher low, while Bitcoin’s price hit a lower low, signaling that selling pressure is weakening—a potential indicator of a trend reversal.U.S. CPI Release Could Be a Key CatalystThe February CPI data, set for release at 12:30 UTC, will be closely watched as it may influence Federal Reserve rate expectations. Analysts expect:Headline CPI: 2.9% YoY (vs. 3.0% in January).Core CPI (excludes food & energy): 3.2% YoY (vs. 3.3% in January).Monthly increase: 0.3% for both core and headline CPI.A lower-than-expected inflation reading could:- Boost risk assets, including Bitcoin, reinforcing expectations of multiple Fed rate cuts.- A hotter-than-expected CPI could trigger fresh selling pressure, dampening hopes of near-term monetary easing.Market Outlook: Will Bitcoin Rebound?Singapore-based crypto trading firm QCP Capital noted that today’s CPI data could dictate market direction, stating:"Tonight’s CPI print could set the tone for rate expectations. Markets now price in four Fed cuts this year, up from just one in January. Will inflation data validate this shift or bring fresh turbulence?"Bitcoin’s technical signals suggest a possible bottom formation, but macroeconomic factors—including CPI data and Fed policy—will determine whether BTC can stage a strong recovery or extend its losses.