Key Points
- Bitcoin’s price fluctuated, dropping and then rising to over $50,000, influenced by higher than expected US CPI data.
- The US CPI growth climbed 3.1 percent on an annual basis, higher than the expected 2.9 percent, causing reactions in the stock and crypto markets.
- Bitcoin’s price has since stabilized above $49.5k, with whale investors continuing with accumulation in anticipation of a rally.
- Bitcoin’s price is likely to maintain a rising trend as long as the support level above $46k holds in the coming weeks.
Bitcoin’s (BTC) price saw a decrease in bullish activity on Tuesday after more than seven consecutive days of a rising trend. This shift occurred as short-term traders rushed to take profits, leading to increased volatility. However, Bitcoin’s price managed to reach a significant milestone, surpassing the $50,000 mark, a level it had not seen in three years due to a bear market. As a result, the entire crypto market saw more than $240 million liquidated in the past 24 hours, according to data from Coinglass.
On Tuesday, the US Bureau of Labor Statistics released the latest Consumer Price Index (CPI) data, which showed a higher than anticipated increase. The consumer price growth climbed 3.1 percent on an annual basis, surpassing the expected 2.9 percent. This surge in the US CPI was primarily driven by the housing sector and ex-housing, which saw a 0.85 percent increase on a month-on-month basis, the largest spike since April 2022.
Impact of Higher CPI on Markets
The higher CPI has led to speculation that the anticipated early US rate cuts might be postponed as the Federal Reserve attempts to manage the high inflation. Following the release of the higher-than-forecasted CPI data, major stock indexes and the crypto markets reacted by retracting from their previous gains. Bitcoin led the altcoin market in following the trend set by Gold and the stock market, while the US dollar index (DXY) gained 1 percent.
Most economists are now predicting that the US Federal Reserve will conduct its first rate cut in June 2024, depending on how the core inflation will have eased. This speculation and the CPI data have caused fluctuations in the crypto and stock markets, with Bitcoin’s price dropping and then climbing to over $50,000.
Bitcoin’s Price Stability and Future Expectations
Despite these fluctuations, Bitcoin’s price has since stabilized above $49.5k. Whale investors have continued with the accumulation game in anticipation of a parabolic rally. Market analysis provided by Santiment indicates that the crypto greed has been gradually decreasing in the past few days and the crowd’s social volume on a possible rally toward $55k has significantly increased. Despite the volatility, Bitcoin’s macro bullish outlook remains unchanged as more crypto cash inflows proliferate from institutional investors.
Popular crypto analyst Michaël van de Poppe suggests that Bitcoin’s price is likely to continue on a rising trend as long as the support level above $46k holds in the coming weeks. Furthermore, the weekly Relative Strength Index (RSI) rallied again above the 70 level, which is an early sign that the bulls are in control. This suggests a positive outlook for Bitcoin’s price in the near future.
