Bitcoin (BTC) Eyes Record High Above $109K as US Signs Trade Deal with China, Inflation Data Looms

China said it will issue a joint statement with the United States outlining what was accomplished.

• Bitcoin is approaching all-time highs as lessening US-China trade tensions and a probable CPI slowdown could bolster the market. 
• Bitcoin and key altcoins such as Ether and DOGE have soared, with ongoing ETF inflows and stable implied volatility implying the rally may continue. 

The trade agreement follows weeks of a tit-for-tat trade battle in which both countries raised import duties above 100%, threatening to cause inflation in the global economy. As a result, investors and analysts widely dismissed the strong March US consumer price inflation data reported last month as a lagging statistic that failed to adequately represent the rising trade tensions. The trade agreement, however, prevents the bears from using that case. 

So, prolonged CPI weakening could increase Fed rate cut bets, providing a positive impetus for a BTC surge to record highs above $110,000. On the other hand, a higher-than-expected CPI may be rejected as retroactive, reflecting the April tariffs and failing to account for the de-escalation in trade tensions.

According to RBC, the Consumer Price Index (CPI) report due Tuesday is expected to show a slight decline in the annual inflation rate, down to 2.3% in April from 2.4% in March. Meanwhile, the core CPI, which excludes volatile items like food and energy, is projected to remain steady at 2.8% year-on-year, as rent inflation continues to ease.

In contrast, 10x Research anticipates that the headline CPI will likely hold at 2.4% in April.

“If inflation continues on this path, markets could interpret it positively,” said Markus Thielen, founder of 10x Research, in a statement to CoinDesk. “Unless there’s unexpected negative news on tariffs, this week’s inflation data could act as a bullish trigger.”

Thielen added, “The CPI release may prove bullish and potentially push markets to new all-time highs.”

According to SoSoValue data, BlackRock’s spot bitcoin ETF (IBIT) has seen net inflows for the past 20 trading days, totalling over $5 billion in investor funds. Last week, the Federal Reserve maintained the benchmark borrowing rate at 4.25% to 4.5% while repeating its data-dependent position on prospective rate decreases. Chairman Jerome Powell, on the other hand, issued dovish indications, stating that “the underlying inflation picture is good,” while claiming that the tariffs’ inflationary impact will be temporary.

According to TradingView, Ether, the second-largest cryptocurrency by market value, increased 39% to $2,500 last week, its highest performance since December 2020. Other significant altcoins, including XRP, DOGE, ADA, and SOL, rose 9.7%, 56%, 19%, and 20%, respectively. 

According to HTX Research, there is no hint of a speculative frenzy yet, implying that the surge could continue.

“Implied volatility (IV) in bitcoin options has remained consistent in the 50%-55% region, far below the extraordinary levels of 80 %+ witnessed at the height of previous bull markets. CME Bitcoin futures open interest is at $14.8 billion, significantly lower than the $20 billion peak seen during the 2020 Trump election cycle, showing that leverage is still manageable, according to HTX Research.

“As long as yields do not climb back above 4.8% and ETF inflows remain steady, Bitcoin is likely to consolidate in the $105,000-$115,000 range while awaiting the next breakout trigger,” HTX said in an email.

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