A soft U.S. inflation report, expected to be released on Wednesday, may benefit risk assets such as bitcoin (BTC). The January consumer price index (CPI) is projected to show a 0.3% monthly increase, down from December's 0.4%, with an annualized figure matching December's 2.9%. Core inflation is forecasted to rise to 0.3% month-over-month, yielding a 3.1% annualized rate. While lower data could enhance prospects for Federal Reserve interest rate cuts, leading to lower Treasury yields and a weaker dollar, forward-looking metrics indicate higher inflation ahead, which could limit BTC's breakout potential. Both BlackRock and RBC believe the Fed will maintain its hawkish stance despite any soft readings on CPI. Furthermore, analysts suggest that unexpectedly high CPI data could push BTC closer to its trading range's lower limit of $90,000.

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