Bitcoin Awaits Inflation Data. CPI could catalyze a key recovery in cryptos.
Bitcoin
and other cryptocurrencies were little moved on Wednesday ahead of the release of US inflation data, which has the potential to drive digital assets back above key levels or usher in the final leg down.
The price of Bitcoin has been trading sluggishly over the past 24 hours at $27,600, with the largest digital asset continuing to slip below the psychologically important $30,000 zone as well as other key technical levels. Bitcoin reclaimed $30,000 in April for the first time since June of last year – when crypto sales accelerated into a brutal bear market – but has since failed to consolidate gains above that point.
“Bitcoin is trading around $27,600, remains near two-month lows and below its 50-day moving average. The bulls can’t get more than a break in the slide, but the market has yet to return to the upside,” said Alex Kuptsikevich, analyst at broker FxPro “Moving out of the $27,000 to $28,500 range could start a broader move towards a breakout with targets at $25,000 and $30,000, respectively.”
Digital assets behaved much like the stock market on Wednesday, with
Dow Jones Industrial Average
and
S&P 500
poised to open around or below flat as investors awaited the release of the US consumer price index (CPI) for April.
Cryptos remain sensitive to macroeconomic trends and especially the development of US interest rates as higher prices dampen demand for riskier assets such as Bitcoin. The Fed has raised interest rates aggressively over the past year in an effort to control decades of high inflation. While markets largely expect the central bank to deliver its latest hike last week, the Fed has signaled it will continue to monitor economic data.
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Economists surveyed by FactSet expect the CPI to have risen 5% year over year in April, flat from March, with core CPI — which strips out volatile food and energy prices — up 5.4% annually, down from 5.6% in March . Investors want to see convincing signs that disinflation is at work, which should reinforce the narrative that the Fed is done hiking. A rise in inflation, on the other hand, could worry investors and could lead to declines in risky assets like Bitcoin.
Beyond Bitcoin,
Ether
-the second largest crypto- was flat around $1,850. Smaller cryptos or altcoins were weaker, too
Cardano
down 1% and
Polygon
miss 2%. Memecoins were more liquid, with both
Dogecoin
and
Shiba Inu
up close to 1%.
Write to Jack Denton at [email protected]
