Bitcoin Price Surges 5% to Reach $65K Following CPI Data – Can BTC Escape Its Current Range?
The bitcoin price experienced a significant increase of over 5%, reaching the $65,000 mark on Wednesday, thanks to the latest US Consumer Price Index (CPI) data, which revealed a decrease in inflationary pressures in April. This development has bolstered expectations that the Federal Reserve will be able to implement several interest rate cuts before the end of 2024.
Simultaneously, the S&P 500 reached new all-time highs with a 0.9% surge. At the same time, US bond yields and the US Dollar Index plunged to lows not seen in a month.
According to CME data, traders are now more confident that at least one interest rate cut will occur by September, with a 71% money market implied probability. This is a slight increase from the 65% probability reported just a day prior.
Bitcoin is now faced with a critical technical obstacle in the form of its 50-day moving average (DMA) at $65,166. Should the bitcoin price surpass this level and its May highs of around $65,500, there is potential for further upward movement in the short term.
If these levels are breached, the next resistance to monitor would be the late-April highs at approximately $67,000. Beyond that, the next target would be a retest of the yearly highs in the $73,000 range.
Should bitcoin manage to surpass these key levels, it could soon surge back to its yearly highs. However, fears of a gradual increase in inflation in Q1 2024 have been hindering bitcoin’s progress in recent months.
Bitcoin has been trapped within a consolidation range, primarily trading between $60,000 and $70,000. The inflation report, while not a game-changer, indicates that the Q1 inflation surge is unlikely to persist.
If concerns about inflation subside moving forward, Bitcoin may find itself benefiting from favorable macroeconomic conditions instead of being held back.
Is it possible for the bitcoin price to break free from its multi-month range? Historically, May has not been a prosperous month for bitcoin. According to bitcoinmonthlyreturn.com, bitcoin experienced a decline of 35% in 2021, 15.5% in 2022, and 7% in 2023. Steno Research reveals that bitcoin has not performed well during the middle months of the year over the past five years.
Typically, post-halving rallies take 4-6 months to gain momentum. This suggests that a significant upward push may not occur until after August. However, 2024 could be different due to being an election year. Markets tend to rally leading up to elections, deviating from their usual bearish summer conditions.
Despite the uncertainties, long-term risks for the bitcoin price remain heavily inclined towards the upside. Interest rate cuts, the halving event, sustained government spending, and the demand for spot bitcoin exchange-traded funds (ETFs) could potentially propel BTC above the $100,000 mark in 2024 or 2025.
Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes only and does not constitute investment advice. There is a possibility of losing all invested capital.
