Cryptotraders eye inflation data to get Bitcoin rally back on track
Bitcoin
and other cryptocurrencies edged higher on Monday, holding on to some of the highest levels for digital assets since last summer, as traders look to inflation data in the coming days as possible catalysts for the next leg up.
The price of Bitcoin has risen 1.5% in the past 24 hours to $28,325. The biggest digital asset has hovered around $28,000 for several weeks now, rising as high as near $29,500 amid bouts of enthusiasm – representing the highest point since the crypto crash accelerated into a brutal bear market last June. Up around 70% so far this year, Bitcoin’s rally has spurred calls for a new crypto bull market.
“Bitcoin failed to pick a direction after the US jobs report’s mixed result last Friday,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank. “The US CPI for the month of March, which will be released this coming Wednesday, could be a catalyst for Bitcoin to test and surpass the $28,800 to $29,000 resistance area of the past three weeks.”
In fact, Bitcoin remains highly sensitive to the macroeconomic backdrop and remains correlated with the stock market, fluctuating in tandem with it
Dow Jones Industrial Average
and
S&P 500
as a leading indicator of risk sentiment. Much of the focus has been on US economic data that could inform the Federal Reserve’s next move on interest rates, although last Friday’s jobs report failed to move the needle much.
Aggressive monetary policy and a wave of rate hikes by the Fed over the past year – an effort to curb decades of high inflation – have been critical headwinds for both crypto prices and stocks, dampening demand for riskier assets. Much of the rally in Bitcoin since the start of 2023 has come amid expectations that the Fed will soon become more accommodative, including possibly taking its first breath of this rate hike cycle when the policy-setting committee meets on 2-3. May.
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Ahead of the next Fed decision in May, inflation data coming this week is big. March’s consumer price index (CPI), a leading inflation indicator, will be released on Wednesday while Thursday will usher in the previous month’s producer price index (PPI).
Traders expect these data points, whether they fuel expectations to hold rates steady in May or strengthen bets for another rate hike, could help shake Bitcoin out of its recent holding pattern.
“Bitcoin has been consolidating sideways, around $28,000, for three weeks now,” said Alex Kuptsikevich, an analyst at broker FxPro. “On the daily time frame, the range has narrowed since the beginning of the month, forming a bullish triangle. It is believed that the price will continue to move towards the breakout, with a rise above $29,000 opening the way to $35,000, while a break below $27,500 could pave way to $25,500.”
Beyond Bitcoin,
Ether
— the second-largest crypto — advanced 1% to $1,860. Smaller cryptos or altcoins were more muted, with
Cardano
and
Polygon
each up less than 1%. There was more of the same from memecoins, too
Dogecoin
up 2% and
Shiba Inu
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gets less than 1%.
Write to Jack Denton at [email protected]
