Bitcoin’s price experienced a significant surge of 7.50% to $66,350 following the release of the latest U.S. inflation data. The consumer price index (CPI) for April rose by 0.3%, slightly lower than the increases seen in March and February. This indicates that inflation is on a downward trend, leading to expectations of a potential interest rate cut by the Federal Reserve in September.
The CPI data is crucial as it reflects a cooling inflation rate, which is a positive sign for the economy. The slower rise in consumer prices aligns with other data showing stagnant retail sales in April, suggesting a slowdown in domestic demand. This is good news for Federal Reserve officials who aim to achieve a “soft landing” for the economy without triggering a recession.
The main drivers of inflation were shelter costs, including rents, which increased by 0.4% for the third consecutive month, and gasoline prices, which rose by 2.8%. These two categories accounted for over 70% of the CPI increase. In contrast, food prices remained unchanged, with significant decreases in supermarket prices for items like eggs, which dropped by 7.3%.
On a year-over-year basis, the CPI increased by 3.4% in April, slightly lower than the 3.5% increase in March. This annual increase has significantly slowed down from its peak of 9.1% in June 2022. Economists had predicted a 0.4% monthly increase and a 3.4% year-over-year increase, indicating a moderation in inflation.
Federal Reserve Chair Jerome Powell stated that although inflation is decreasing slowly, he expects it to continue moving towards the Fed’s 2% target. Financial markets now anticipate a 73% probability of a rate cut in September, up from 69% before the data release. Some economists even speculate that the Fed may start reducing borrowing costs as early as July.
The expectation of a rate cut has had a positive impact on stock markets, with Wall Street trading higher, the dollar weakening against other currencies, and U.S. Treasury prices rising. This economic environment has fueled a rally in Bitcoin’s price as investors seek alternative assets amidst changing monetary policies.
Currently, Bitcoin is trading at $66,350, up 7.50%, according to a bullish Bitcoin price prediction. The 4-hour chart shows a strong bullish rally, with Bitcoin breaking out of a symmetrical triangle pattern around the $63,300 level. This breakout is confirmed by two significant bullish engulfing candles, indicating strong upward momentum.
However, caution is advised as recent candlestick formations, including Doji and spinning tops around the $66,200 level, suggest potential market indecision. These patterns, combined with an overbought RSI of 78, could signal a forthcoming bearish correction.
Key price levels to watch include the pivot point at $65,150, which serves as a crucial support level. Immediate resistance is found at $67,300, with further resistance at $68,545 and $70,000. On the downside, immediate support is at $63,300, followed by $61,560 and $60,185. The 50-day Exponential Moving Average (EMA) at $62,565 also provides critical support, reinforcing the bullish trend.
In conclusion, the overall outlook for Bitcoin remains bullish above the $65,150 pivot point. However, a break below this level could trigger a sharp selling trend, targeting immediate support at $63,300. It is important to note that investing in cryptocurrencies is high-risk, and this article is for informational purposes only and should not be considered as investment advice.
