Market volatility is spiking as liquidity providers brace for the upcoming US inflation report. This data will dictate the Federal Reserve trajectory for interest rate decisions in the coming months.
Traders are currently removing risk from Bitcoin positions to hedge against a higher for longer interest rate environment. If inflation remains sticky above target levels, expect further liquidation of long positions as the market prices in more aggressive rate hikes.
The key level to watch is the reaction of the DXY and its correlation with Bitcoin price action during the data release.