Investors are on high alert as Bitcoin and the broader crypto market brace for a pivotal moment with the release of January's inflation data. This comes after a surprising jobs report reshaped expectations for Federal Reserve policy, setting the stage for potential volatility.

**In Brief**
- **January payrolls surged by 130,000**, reinforcing the view that the Federal Reserve is likely to keep interest rates steady in the near term.
- Futures markets have **rapidly adjusted**, pushing anticipated rate cuts into the second half of the year, tightening financial conditions despite signs of slowing price pressures.
- **Bitcoin continues to consolidate** after this repricing, with analysts noting that elevated yields are dampening risk appetite, even as sell-side pressure shows early signs of easing.

**Eyes on Inflation: The Key Catalyst**
Investors are now focused on this week's delayed release of the January Consumer Price Index (CPI) data, expected on Friday. Forecasts suggest a reduction to **2.5% year-over-year**, down 0.2% from December. According to Derek Lim, head of research at crypto market-making firm Caladan, **"Lower than expected inflation would increase pressure on the Fed to cut rates sooner, which would be good for risk assets."** Lower Fed rates typically ease financial conditions, encouraging greater risk-taking and historically supporting assets like equities and crypto during periods of abundant liquidity.

Conversely, a **hotter-than-expected inflation figure** could reinforce a "higher-for-longer" rate regime, putting pressure on risk assets. Following the strong jobs data, experts believe the Fed is unlikely to pivot toward economic stimulus soon, with CME’s FedWatch tool showing a **94.6% probability** that rates will remain unchanged at 3.50%-3.75%.

**Market Sentiment and Bitcoin's Position**
This sentiment has weighed heavily on market expectations, triggering corrections in crypto and other risk assets. Tim Sun, Senior Researcher at HashKey Group, explains that **"strong employment suggests economic resilience remains, meaning the Fed has no urgent reason for early easing."** He adds that as long as Treasury yields stay elevated, financing costs and discount rates will struggle to fall, sustaining pressure on high-risk assets like Bitcoin.

Despite the fragility, Sun suggests that **sell-side pressure may be nearing exhaustion**. "From the perspective of price action and on-chain distribution, the pace of the decline is indeed decelerating," he notes. "However, we have yet to see a signal for a definitive trend reversal."

**Bitcoin's Current State**
Bitcoin is down **0.5% over the past 24 hours** to around $67,200, while Ethereum remains flat at $1,970, according to CoinGecko. The top cryptocurrency has been consolidating between **$62,822 and $72,000** over the past week, with volatility relatively subdued following the late January and early February selloff.

As the market awaits the inflation data, the outcome could be a major driver for Bitcoin's next move, making this a critical week for crypto investors.

Investors are focused on January’s CPI release after stronger-than-expected jobs data forced a repricing of rate expectations.

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