Bitcoin Price Drops and Then Climbs to Over $50K on Hotter than Expected US CPI Data

UTC by Steve Muchoki · 3 min read
Bitcoin Price Drops and Then Climbs to Over $50K on Hotter than Expected US CPI Data
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According to a popular crypto analyst Michaël van de Poppe, Bitcoin price is likely to continue on a rising trend as long as the support level holds at above $46k in the coming weeks.

After registering more than seven consecutive days of rising trend, Bitcoin (BTC) price experienced lower bullish activity on Tuesday. The flagship coin experienced a sharp uptick in volatility as more short-term traders rushed to take profits. Moreover, Bitcoin price reached a major milestone above $50,000 after being trapped in the bear market for the past three years. As a result, more than $240 million was liquidated from the entire crypto market in the past 24 hours, according to market data provided by Coinglass.

Higher than Projected CPI Weighs Heavily on Bulls

On Tuesday, the United States Bureau of Labor Statistics released the latest data on the Consumer Price Index (CPI), which came in higher than forecasted. According to the US CPI update, the consumer price growth climbed 3.1 percent on an annual basis, while analysts expected 2.9 percent. Notably, the spike in  US CPI was triggered by the housing sector and ex-housing that increased by 0.85 percent MoM basis, the largest spike since April 2022. Some economists have argued that the shelter issue could be much worse than the official figures showed, thus indicating a huge failure of the Fed to tame inflation.

Consequently, the anticipated early US rate cuts could be delayed as the Fed attempts to further tame the high inflation. Following the higher-than-forecasted CPI data, the major stock indexes and the crypto markets reacted by retracing from the prior gains. Notably, Bitcoin price led the altcoin market in following the Gold and the stock market retracement, while the US dollar index (DXY) gained 1 percent. Meanwhile, most economists anticipate the United States Federal Reserve will conduct its first rate cut in June 2024, depending on how the core inflation will have eased.

BTC Price Action and Short-Term Expectations

Bitcoin price has since stabilized above $49.5k on Thursday, as whale investors continued with the accumulation game in anticipation of the parabolic rally. According to market analysis provided by Santiment, 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. Bitcoin’s macro bullish outlook remains unchanged despite the volatility as more crypto cash inflows proliferate from institutional investors.

According to a popular crypto analyst Michaël van de Poppe, Bitcoin price is likely to continue on a rising trend as long as the support level above $46k holds in the coming weeks. Moreover, the weekly Relative Strength Index (RSI) rallied again above the 70 level, which is an early sign that the bulls are in control.

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