Bitcoin price gains 3.5% as US PCE data supports shrinking inflation
Bitcoin (BTC) rose sharply later on August 26 as fresh economic data from the US fueled hopes of a pivot from the Federal Reserve.
Bitcoin bounces but preserves intraday trend
Data from Cointelegraph Markets Pro and TradingView tracked a 3.55% gain for BTC/USD on the day, allowing the pair to match highs from earlier in the week.
The move marked a surprise turnaround for Bitcoin, which hours earlier had seen selling pressure as markets awaited cues from Fed Chair Jerome Powell’s Jackson Hole symposium speech.
With that speech still pending at the time of writing, an absurd catalyst came in the form of the latest Personal Consumer Price Index (PCE) reading, which was lower than expected.
Analysts reacted positively, as the figures added weight to the idea that inflation in the US had already peaked – a narrative already supported by the consumer price index (CPI).
Here’s how #crypto the market reacted to better than expected PCE report. #BTC liquidity is in motion. A rip through the area before #JPow speech at 10 ET is not excluded. After all, it is #FED #DamnFriday #NFA pic.twitter.com/32jU1WNPGm
— Material Indicators (@MI_Algos) 26 August 2022
However, Caleb Franzen, senior market analyst at Cubic Analytics, noted that the BTC/USD hourly structure remained in place despite the rally. Bitcoin traded in an unchallenged range since the August 19 drop from higher levels.
#Bitcoin The 1 hour structure is still intact after the PCE data.
Meeting resistance in the red area and also testing the previous support trendline (teal), which threatens to act as resistance as well. pic.twitter.com/bTZF9rxVsa
— Caleb Franzen (@CalebFranzen) 26 August 2022
Analyst Kevin Svenson was equally conservative in his view of the potential fallout for Bitcoin.
“PCE data is bullish. The FED is using this data, so now speculators are betting higher,” he explained.
“But if Powell stays the course, we can easily dump back down, so just be careful. Sort of a coin flip now.”
At the time of writing, BTC/USD was trading around $21,500, a key range containing Bitcoin’s realized price.
“Most participants” in Bitcoin are asleep
Analyzing long-term trends, meanwhile, BlockTrends analyst Caue Oliveira had some bad news for those hoping for a more seismic return for BTC price action.
Related: CME Bitcoin Futures See Record Discount Amid ‘Very Bearish Sentiment’
Network usage, he noted in a blog post on the day, was still on a downward trend, leaving little room for any bull run to be supported by strong volume.
“Bitcoin’s new bull market canceled, at least for now,” he admitted.
“With no sign of an increase in demand for the network, the resumption of the price of Bitcoin is still far from happening, pointing to a moment of accumulation.”
An accompanying chart from chain analytics firm Glassnode showed median transaction volume in the chain at a two-year low, even accounting for the latest price spike.
This, Oliveira added, explained one four-year low in the exchange’s BTC reserves, as appetite for trading had waned in line with a lack of speculative activity.
“For now, most participants remain inactive, including institutional ones,” he concluded
“Good time for long-term accumulators, but for short-term traders, caution is needed.”
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.
