Bitcoin halts four-day slide as CPI comes in better than expected
Buoyed by better-than-expected US Consumer Price Index (CPI) data, Bitcoin saw a 1.6% gain in the 13:30 (BST) 30-minute candlestick to close at $28,197.
The move was accompanied by high volume to break a four-day slide for the leading cryptocurrency.
Larger macro factors weigh heavily on Bitcoin uncertainty
Since breaking below $30,000 on April 17, BTC found support at $27,000 on April 24.
It has since hovered between $27,280 and $30,050 – with both limits showing strong support and resistance, as suggested by multiple touches on the respective bands.
After being rejected at $29,940 resistance on May 6, BTC closed consecutive red daily candles over a four-day period – losing 8% during that time frame.
The current macroeconomic narrative is focused on the $31 trillion debt ceiling and whether the US will default if a bipartisan deal cannot be struck.
Treasury Secretary Janet Yellen warned that the administration will run out of money by June 1 if an agreement cannot be reached.
Meanwhile, the Fed’s rate hike program appears to be having the desired effect, at least against month-to-month expectations.
On May 3, the central bank raised interest rates by 25 basis points, bringing the Federal Funds rate to 5.00% – 5.25%. The next FOMC meeting concludes on June 14, with markets currently 87% in favor of no hike – likely in recognition of ongoing bank weakness in recent weeks.
CPI data
The CPI rose 4.9% in April, and is less than the expected 5% interest rate.
Nevertheless, the core CPI grew by 0.4% in April against expectations of a 0.4% increase. This brings the core CPI year-on-year to 5.5% – unchanged from April last year.
Like the CPI, the core CPI also tracks the price of goods and services, but differs by excluding food and energy prices – which are said to be too volatile to include. Central banks use core KPIs, not CPI, to inform policy.
Meanwhile, through this period of uncertainty, Bitcoin has held firm – even showing fleeting signs of safe-haven qualities during the banking crisis.
For now, June 14 is the market awaiting the Fed’s assessment – with many holding out for a pause, which could lead to a pivot.
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