Crypto Volatility Increases As Bitcoin Price Rises, Only To Return To $27,900 Support

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(Kitco News) – Volatility remains the name of the game in the cryptocurrency market, as Wednesday saw the price of Bitcoin pump and dump following the latest Consumer Price Index (CPI) release, leaving the top crypto relatively unchanged on the 24-hour chart.

In the equity markets, stocks traded mixed as inflation came in slightly lower than expected, but stayed well above the Federal Reserve’s 2% target. At the close, the S&P and Nasdaq managed to finish in the green, up 0.43% and 1.04% respectively, while the Dow recorded a small loss of 0.08%.

Data provided by TradingView shows that the price of Bitcoin (BTC) briefly rose to a high of $28,405 after the CPI data release, only to reverse sharply in the afternoon, plunging to a daily low of $26,885 before being bid back above $27,700 where it has traded since Monday’s close.

BTC/USD Chart by TradingView

May Bitcoin futures prices “have recently dropped to test the key support line around $27,000,” according to Kitco senior technical analyst Jim Wyckoff, who posted the following chart highlighting the range BTC has been trading in since mid-March.

Bitcoin futures 1-day chart. Source: Kitco

“Bulls remain a little shaky midweek,” Wyckoff said. “A drop below this support line would give the bears new impetus to propose another leg down in prices in the near term. Right now, the bulls and bears are on a neutral general technical playing field in the near term.”

Analysts at Eight Global said that “Bitcoin is in compression at the moment,” which they defined as “a type of price action where we see a sequence, as they delve further into the range-bound trade for BTC over the past month and a half . of lower highs and higher lows.”

BTC/USD 1-Day Chart. Source: Eight Global

“A compression often leads to a very heavy pull,” Eight Global said. “The reason for that is that we are building a ton of liquidity on either side of the market. This is due to the fact that we are not sweeping anything high or low, the price is being pushed away and we will still have a lot of resting orders in the order book in the form of stop losses .”

Eight Global emphasized the point that in market formations like this, a breakout in either direction is equally possible, so using “appropriate risk management” is key.

BTC/USD 1-Day Chart. Source: Eight Global

As it stands now, the analysts are leaning towards a price collapse for several reasons. “We continue to reject the daily order block without taking out liquidity on the downside, but the last couple of days the price looks quite weak,” they wrote. “From a biased standpoint, I would say that eventually we’re going to move toward the lows around 26.5K, which is also in line with a daily imbalance that lies below that.”

Altcoins are trending higher

Overall, it was a positive day for the altcoin market as the majority of tokens in the top 200 posted gains for the day, led by a 22.8% increase for TomoChain (TOMO).

Daily performance in the cryptocurrency market. Source: Coin360

Other notable double-digit gainers on Wednesday included a 19.02% gain for Open Campus (EDU), a 12.3% gain for Gala (GALA) and a 10.1% gain for Aragon (ANT).

The total cryptocurrency market cap is now at $1.145 trillion, and Bitcoin’s dominance rate is 46.9%.