Bitcoin Holds $24K as USD Touches 3-Week Low on Eurozone Inflation Report

by · July 29, 2022

Bitcoin (BTC) sought to peg $24,000 as support before the Wall Street open on July 29, as fresh inflation data sparked concerns for the euro.

BTC/USD 1-Hour Candlestick Chart (Bitstamp). Source: TradingView

Eurozone inflation estimates show no peak

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD maintaining most of its recent gains after surging to nearly $24,500 overnight.

Today’s macro action delivered painful news for the European Economic Area (EEA), as the latest estimates for euro inflation came in at 8.9% for July – still up from June’s 8.6%.

“Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in July (39.7%, compared to 42.0% in June), followed by food, alcohol and tobacco (9.8%, compared with 8.9% in June).June), non-energy industrial goods (4.5%, compared to 4.3% in June) and services (3.7%, compared to 3.4% in June),” states that in an accompanying report prepared by Eurostat.

The data provided a curious contrast in some EU member states, where growth exceeded expectations despite the highest inflation figures in the history of the euro’s existence. This led some commentators to suspect that all was not as it seemed.

The European dilemma, however, strengthened the US dollar, which had retreated from its past two-decade highs against a basket of trading partner currencies through July.

The US dollar index (DXY) hit 105.54 on the day, its lowest reading since July 5, before rebounding to near 106 at the time of writing.

A key inverse correlation for crypto markets, further DXY advances could signal fresh pressure on BTC price action.

“DXY just dropped to the previous high now support and looks to hold. A possible bounce here to 107, 108 before further declines,” popular trading account Mikybull Crypto predicted in a recent Twitter update, adding that this scenario would involve a pullback to $22,800 for BTC/USD.

US dollar index (DXY) 1-day candlestick chart. Source: TradingView

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In a arguably an unexpected bullish turn, meanwhile Arthur Hayes, former CEO of derivatives platform BitMEX, hinted that a weaker dollar was now imminent.

Related: Bitcoin bull run ‘gets interesting’ as BTC price hits 6-week high

Following the Federal Reserve’s latest key rate hike, Hayes stated that the central bank’s return to accommodative monetary policy and more neutral interest rates had now begun.

Fed Chairman Jerome Powell, he wrote on July 28, would not increase hikes any further, something he called the “Powell pivot.”

The theory, as Cointelegraph recently reported, is that the Fed has little room left to maneuver thanks to interest rate hikes that increase the likelihood of a deeper recession in the US economy.

The latest GDP data released this week had already placed the US in a technical recession thanks to two straight quarters of negative numbers.

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