Bitcoin traders are once again awaiting key inflation figures that could tip the scales toward a hawkish or dovish Federal Reserve pivot, aimed at curbing rising costs.

While investors are caught between a bullish resolution to the U.S. government shutdown and a bearish pullback in risk appetite, Thursday’s inflation report is expected to set the tone for the market’s next major move.

Sentiment after the October 10 crash, which witnessed a $19 billion liquidation wipeout, improved last week as geopolitical uncertainties eased and technicals firmed.

However, that optimism has been overshadowed by the upcoming U.S. October Consumer Price Index report, the second inflation print since the country’s government shutdown began 43 days ago.

October’s year-over-year inflation is expected to hold steady at 3%, according to consensus estimates compiled by FXStreet. 

“There is still some uncertainty about whether the CPI data will be released on schedule tomorrow,” Tim Sun, Senior Researcher at HashKey Group, told Decrypt.

The October figure, alongside any belated September data, “will directly determine how traders price in a potential rate cut in December, and will serve as the benchmark for short-term market positioning,” Sun added. 

Odds of a rate cut have dropped to 67.9%, down from 85% last week, per FedWatch tool data, reflecting Federal Reserve Chairman Jerome Powell’s hawkish stance in recent weeks. 

A cooler-than-expected print could fuel bets on a more dovish Federal Reserve, weakening the U.S. dollar strength and potentially boosting risk assets like Bitcoin. Conversely, a hotter report could strengthen the dollar and extend Bitcoin’s losses.

The top crypto has dropped 2.7% to $103,600 over the last 24 hours, erasing gains made throughout Sunday trading, according to CoinGecko data. 

“Yesterday’s decline can be directly attributed to a broad-based reduction in overall risk appetite,” Sun noted. He pointed to a capital rotation out of tech stocks and into stable blue-chips as a clear signal of investor caution amid macro and geopolitical uncertainty.

“The market is still constrained by weak sentiment. Any clear indication of a rate-cut trajectory or expectations of liquidity easing could restore some level of risk appetite,” the HashKey analyst said, noting this would provide “direct support for a price rebound across risk assets.”