Bitcoin Drops 3% Ahead of Key Inflation Data That Could Influence Fed Rate Cuts

• Bitcoin failed to break out above a key resistance level ahead of important US inflation data, sparking a 3% price drop. The data could influence Fed rate cut timing.

• The failed breakout likely reflects temporary nervousness about the inflation data rather than an outright bearish reversal.

• Markets have scaled back expectations for Fed rate cuts this year based on a resilient economy. Softer inflation could put a June cut back on the table.

• Risk assets like bitcoin could see upside volatility if inflation comes in below forecasts, signaling potential Fed rate cuts.

• Bitcoin closely tracks the tech-heavy Nasdaq index, which rose on Tuesday, offering a positive signal for crypto.