US-Iran Tensions Rise. Bitcoin Gains Instead of Falling, This Week’s CPI Sets Tone for Pullback Risk

TradingKey - Tensions between the U.S. and Iran remain manageable and have not threatened the Bitcoin rally, but this Tuesday's CPI data could trigger a price pullback to $75,000.

On Monday (May 11), ignoring the escalating tensions between the U.S. and Iran, Bitcoin ( BTC) price extended its rally to break above $82,000 again. Today, Bitcoin rose over 1%, reaching a high of $82,358, approaching last Wednesday's peak. Once this resistance level is breached, it is expected to challenge the $90,000 milestone, making the upcoming CPI data critical.

Bitcoin price chart, Source: CoinMarketCap

According to Iranian media reports on May 9, Iran has submitted a response to the latest U.S. proposal aimed at ending the conflict to the mediator, Pakistan. The response roughly includes four points: demanding that the U.S. pay war reparations, confirming Iran's sovereignty over the Strait of Hormuz, the necessity of ending sanctions against Iran, and unfreezing the country's frozen assets.

Regarding Iran's response, U.S. President Trump expressed dissatisfaction, posting on social media that it was "completely unacceptable." Trump also emphasized, "I didn't say the hostilities against Iran were over, but I did say they were defeated."

Despite Trump's dissatisfaction, it remains purely verbal at this point and has not translated into action; no further military operations have been taken against Iran. This suggests that the situation in the Middle East remains manageable, with both sides likely to engage in further consultations regarding a peace plan, as the U.S.-Iran peace process remains largely intact. Consequently, Bitcoin prices did not plunge due to the slight escalation but instead maintained their upward momentum.

Looking at Bitcoin's movement over the past seven days, the bulls have shown weakness at $83,000, where bears have chosen to assert pressure, resulting in a tug-of-war at that level. However, neither side has taken further action as they await the release of the April CPI data this Tuesday.

Bitcoin price chart, Source: TradingView

If the data is higher than the expected 3.3% (or even close to 3.5%), expectations for a Federal Reserve rate cut will be completely shattered, leading to a stronger dollar and surging Treasury yields. Tightened liquidity would suppress risk appetite, potentially driving BTC to retest the key support level at $75,000. Conversely, if core inflation shows signs of cooling, it could offset rising energy prices, easing market sentiment and sparking a rally in risk assets, potentially pushing BTC past $90,000 or even toward the $100,000 mark.