The Bureau of Labor Statistics is poised to unveil the March 2024 Consumer Price Index (CPI) figures on Wednesday at 8:30 a.m. ET (12:30 UTC), heightening anticipation within financial markets.

Bitcoin (BTC) has witnessed a 3% decline over the past 24 hours, marking a setback to a bullish breakout trajectory, just ahead of the pivotal release of U.S. inflation data. This data release is closely watched as it could influence the Federal Reserve's (Fed) decision on adjusting interest rates.

The leading cryptocurrency, BTC, has retraced into a triangular consolidation pattern, delineated by trendlines connecting the highs of March 15 and March 27, as well as the lows of March 20 and April 3. This symmetrical triangle consolidation recently experienced a bullish breakout, which initially indicated the potential for a rally to $80,000.

However, failed breakouts often trigger short-term traders to close or reverse bullish positions, anticipating a deeper price decline. Despite this, Markus Thielen, the founder of 10x Research, urges caution against over-interpreting Bitcoin's recent reversal.

"Bitcoin's failed breakout likely represents nervousness ahead of the U.S. CPI release. I would not write it off yet," Thielen remarked during a conversation with CoinDesk.

Thielen also highlighted positive signals from Wall Street, particularly the rise in the tech-heavy Nasdaq index on Tuesday. Such positive market trends on Wall Street could translate into a brief downturn for Bitcoin. The cryptocurrency market closely follows trends in the Nasdaq and the Nasdaq-to-S&P 500 ratio.

Market analysts predict that the CPI data release may indicate a 3.5% increase in the consumer price index since March 2023, showing an acceleration from February's 3.2% annual inflation rate. However, the monthly pace is expected to have moderated to 0.3%, down from February's 0.4% rate.

Similarly, core inflation, excluding volatile food and energy components, is forecasted to have slowed to 0.3% in March, compared to February's 0.4% gain, resulting in a 12-month decline to 3.7% from 3.8%.

As market expectations for Fed rate cuts have already adjusted due to a resilient economy and labor market conditions, the reaction to the CPI release may vary. A higher-than-expected CPI release may not necessarily trigger significant downside volatility in Bitcoin, as markets have already tempered expectations for rate cuts. Conversely, a softer CPI print could reignite bullish sentiment in Bitcoin, especially if it suggests the possibility of a rate cut in June.

"Inflation unexpectedly dropping would most likely have a bigger impact on assets, including crypto, as it would signal that maybe the Fed does have an excuse to cut in June after all," noted Noelle Acheson, author of the Crypto Is Macro Now newsletter.